Jarden Brief: Russian ruble falls to under US1c in value

The value of the Russian Rouble versus the US dollar has slumped this week. Photo / Getty Images

Keeping you up to date with the latest market moves, in association with Investment firm Jarden

New Zealand

The NZX 50 closed back in the green yesterday, climbing 1 per cent.

The top mover at close on Thursday was real estate investment company Vital Healthcare Property Trust, increasing 5.3 per cent.

Tourism Holdings followed suit, up 3.5 per cent. Auckland Airport rose 3.1 per cent.

Leading the bottom movers was Stride Property Group, dropping 2.5 per cent yesterday. Stride closed at $1.95 continuing its decline since September.

Air New Zealand fell 1.6 per cent to close at $1.51, continuing Wednesday's decline.

Meridian Energy traded 1.5 per cent lower.

Infratil was named company of the year for 2021 at Deloitte's Top 200 award ceremony on Wednesday. This was judged based on latest financial measures, as well as non-financial and other qualitative measures of organisational performance.

AMP, Kiwi Wealth and ASB followed Westpac, ANZ and BNZ in selling their Russian investments. AMP does also offer the option of investing in funds managed by other fund managers, and the company said those managers would determine whether to sell any Russian investments that they own.

Mindful Money listed $100 million worth of KiwiSaver funds invested in Russia, at the end of September last year. New Zealand's government wealth funds (NZ Super Fund, Accident Compensation Corporation, Government Superannuation Fund and National Provident Fund) announced they will cease investing in Russian issued bonds and shares of most Russian state-owned enterprises.

RBNZ released a survey focused on the use of cash in New Zealand, showing everyday cash use has declined. In 2021, 63 per cent of New Zealanders used cash to pay for everyday things, compared to 96 per cent in 2019. The proportion of New Zealanders storing cash for non-immediate use, increased from 38 to 46 per cent between 2017 and 2021.

Household total debt increased 29 per cent from June 2018 to June 2021, according to Stats NZ. The 30 per cent increase in mortgage debt on the family home was the likely reason for the rise. Other real estate loans also increased 44 per cent.

Property debt, not including that held in a trust, made up 89 per cent of total household debt in New Zealand. Median property debt increased by $56,000 to $260,000 over the three years. Stats NZ wealth and poverty statistics senior manager Andrew Neal said: "Recent years have seen an increase in both housing values and mortgage debt."

International
US

Reversing from the previous day, all major US indices were down at the time of writing. The S&P 500 decreased 0.5 per cent, the Dow Jones fell 0.4 per cent, and the NASDAQ was down 1.1 per cent.

Most sectors traded lower with the exceptions being utilities (+0.9 per cent), consumer staples (+0.4 per cent) and real estate (+0.2 per cent respectively). The two biggest underperformers were consumer discretionary, decreasing 1.7 per cent and technology falling 1 per cent.

Food retailer Kroger was the single stock best performer, increasing 10.2 per cent at the time of writing. The share price jumped after Kroger announced a US$100 million customer fulfillment centre which will create 400 full-time jobs and provide a 1.5 per cent tax credit for the company.

Cloud and software solutions provider Splunk was up 8.5 per cent. Splunk released quarterly earnings, which were 16 per cent above analysts' expectations. The company also announced its new CEO as Gary Steele, who has a proven track record in software companies and investor consensus believes this is a good fit for the company.

Best Buy joined the biggest gainers, increasing 8 per cent. Despite the company posting its quarterly earnings which were below expectations. Executives stated that they believe Best Buy will benefit in the long term from consumers' adoption of videoconferencing, telemedicine, and more, amidst the Covid-19 pandemic.

The largest decliner, at the time of writing, was software developer Epam Systems, down 9.1 per cent. The company continues its volatility, having been in the market's top three gainers or underperformers every day this week.

Fiber laser developer IPG Photonics fell 8.3 per cent. This is on the back of an announcement that they are maintaining their operations in Russia, despite the conflict.

Rounding out the bottom three movers was electronic trading platform Marketaxess Holdings, which declined 5.1 per cent. Despite releasing its market volume statistics showing an increase of 17.0 per cent in total trading volume.

Rest of the World

The major Asian indices delivered a mixed performance overnight. The Shanghai Composite was down 0.1 per cent, while the Nikkei and Hang Seng were up 0.7 and 0.6 per cent, respectively. This mixed performance is likely supported by the increase and volatility of oil prices.

At the time of writing all major European indices were in the red with the FTSE, the DAX and the CAC down 2.6, 2.2 and 1.8 per cent respectively.

For the fourth day in a row the MOEX (main Russian stock exchange) remains closed. Amidst this closure and the ongoing uncertainty around the events in Ukraine, the Russian ruble has fallen to be worth less than one US cent at the time of writing.

This reflects a drop of more than 21 per cent for the ruble, from the start of this week (relative to the US dollar).

Commodities

Gold increased 0.5 per cent while silver fell 0.2 per cent.

Oil shed 0.7 per cent to US$109.88 per barrel, up approximately 18 per cent from the start of the week. Natural gas dropped 1.2 per cent.

The cryptocurrency market was down 4.1 per cent overall. Ethereum and Bitcoin decreased 5.1 and 3.8 per cent respectively.

The US 10-year treasury rate dropped three basis points to 1.84 per cent.

Australia

The ASX 200 advanced for a fourth day in a row, ending Thursday's session up 0.5 per cent at 7,151.40 points.

The Australian market was strengthened by reduced anxiety over interest rate rises in the US, along with strong overseas markets and commodity price gains.

Materials (+2.6 per cent) and energy (+2.6 per cent) were the best performing sectors yesterday. However, most sectors experienced a decline, with consumer staples (-2.3 per cent) and healthcare (-1.3 per cent) booking the biggest losses.

Yesterday's top performer was PointsBet Holdings, increasing 18.2 per cent to A$4.35, on seemingly no news. The bookmaker rebounded following a poor day of trading on Wednesday.

Mining company Whitehaven Coal gained 10.6 per cent, buoyed by rising coal prices internationally as European countries search for substitutes to Russian natural gas.

Battery metal developer Liontown Resources rounded out the podium of single stock outperformers, rising 7 per cent to close at A$1.62.

PolyNovo was yesterday's largest laggard, falling 6.4 per cent to close at A$1.11.

Asset management company Platinum Asset Management and funeral provider Invocare also landed in the red, declining 5.2 and 4.4 per cent, respectively.

In other news, fragrance retailer Dusk revealed it would not be acquiring candle business Eroma, calling off a proposed A$28 million deal announced late last year. Dusk finished in the red yesterday, down 0.8 per cent.

New data from the Australian Bureau of Statistics (ABS) reveals a drop in building approvals of 27.9 per cent in January, following a 9.8 per cent increase in the previous month. Victoria saw the greatest decline (-35.5 per cent), followed by South Australia (-29.2 per cent) and New South Wales (-25.9 per cent). ABS attributes this to a large reduction in approval numbers for private sector dwellings excluding houses (-43.6 per cent).

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Disclaimer: The Jarden Brief is provided for general information purposes only. It reflects views and research available at the time of publication, using external sources, systems and other data and information we believe to be accurate, complete and reliable at the time of preparation. We make no representation or warranty as to the accuracy, correctness and completeness of that information, and will not be liable or responsible for any error or omission. The Jarden Brief is not to be relied upon as a basis for making any investment decision. Please seek specific investment advice before making any investment decision. Jarden Securities Limited is an NZX Firm. A financial advice disclosure statement is available free of charge at https://www.jarden.co.nz/our-services/wealth-management/financial-advice-provider-disclosure-statement/ Full disclaimer available at: https://www.jarden.co.nz/wealth-sales-and-research-disclaimer