Jarden Brief: US indices down

The Nasdaq and Dow Jones Industrial Average have dropped 0.4 and 0.2 per cent. Photo / Getty Images

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

International
US

At the time of writing, the S&P 500 was trading flat, while the Nasdaq and Dow Jones Industrial Average have dropped 0.4 and 0.2 per cent, respectively.

The energy sector was leading the market higher, up 2.4 per cent. This was followed by financials and real estate which rose 1.5 and 1.2 per cent, respectively. In the red were consumer discretionary (-0.5 per cent), consumer staples (-0.5 per cent), and technology (-0.1 per cent).

Outperforming the S&P 500 was Western Digital, a data storage company, which jumped 15.0 per cent. The firm was provided with a report analysing the large gain in share value that could be achieved by separating the business into two entities, specialising in hard disk drives and flash memory, respectively.

Pharmaceutical delivery system producer Catalent increased 12.0 per cent. At the same time, semiconductor manufacturer Monolithic Power Systems rose 10.0 per cent. Both firms have recently released quarterly reports showing sizable growth.

Leading the underperformers was travel company Expedia Group (-13.9 per cent), and industrial transformation firm Rockwell Automation (-13.5 per cent). Both companies announced relatively poor earnings in their recent financial reports.

Live Nation Entertainment, providing event marketing and ticket sales, also fell 5.4 per cent.

Tomorrow, the Federal Open Market Committee is set to reveal their current stance on monetary policy. In March, the Committee increased the federal interest rate by 0.25 per cent, the first rate hike since 2018. At the time, only one member of the Committee had been advocating for a 0.5 per cent increase in the interest rate but now many economists now see such a rise as unavoidable.

Commentators have noted that US Federal Reserve Chairman Jerome Powell faces the difficult job of increasing the interest rate to counter inflationary pressure on the economy, while reducing bond holdings, at a time where the market seems vulnerable.

Rest of the World

The Shanghai Composite and Hang Seng indices rose 2.4 and 0.1 per cent, respectively. The Nikkei showed a slight drop, down 0.1 per cent.

European markets were all in the green, the CAC, DAX, and FTSE increased 0.8, 0.7, and 0.2 per cent, respectively. A single sell order made by Citigroup, a financial services provider, was followed by a flash-crash in European shares yesterday. The Stockholm OMX 30 index fell 8.0 per cent within five minutes, before quickly recovering most of those losses.

Commodities

WTI Crude Oil decreased 2.1 per cent to US$102.97 per barrel. Conversely, natural gas has jumped 7.3 per cent due to lower US production and gas supplies in storage, as well as the European Union considering another round of sanctions on Russia's energy sector.

Metal futures have reversed course from yesterday, increasing across the board. Gold is up 0.4 per cent to US$1871 per ounce.

Bitcoin and Ethereum fell 1.0 and 0.9 per cent, respectively.

The US 10-Year Treasury yield is down six basis points to 2.94 per cent.

New Zealand

The NZX 50 closed in the red with a 0.9 per cent fall yesterday.

Fleet management technology provider EROAD was the top performer, closing 4.1 per cent higher. Industrial and agricultural manufacturer Skellerup Holdings gained 3.5 per cent. Trustpower rounded out the podium of outperformers with a 1.5 per cent improvement.

Listed property companies led the underperformers. Argosy Property fell 3.4 per cent. Property For Industry dropped 3.0 per cent and Kiwi Property Group declined 2.8 per cent. Stride Property also closed in the red (-2.6 per cent).

Statistics New Zealand data for the year ended March 2022 has revealed a 24 per cent increase in the actual number of new dwelling consents compared to the previous year. Canterbury saw the largest increase (41.0 per cent).

The month of March 2022 saw 5,303 consents for new dwellings, comprising largely of stand-alone houses (2,303 consents) and townhouses, flats, and units (2,172 consents).

New data from real estate firm Barfoot & Thompson shows a decline in Auckland's average house sale price in April from $1.23 million to $1.21 million. The median price also reduced to $1.41 million, from $1.81 million previously.

The number of properties sold plunged 47.9 per cent in April compared to March. Barfoot & Thompson's managing director noted that "buyers are now showing a greater reluctance to meet vendor expectations".

A new fiscal rule will require the government to hold an average percentage surplus of between 0.0 and 2.0 per cent of GDP once a surplus is reached, expected in the 2024/25 financial year. The rule will include allowances for significant economic shocks in the vein of the global financial crisis and Covid-19 pandemic.

The Government yesterday announced it will also implement a new headline net debt calculation which will include a wider array of Crown assets and liabilities, including those held by the Super Fund and Kainga Ora. Alongside this, a new debt limit of 30 per cent of GDP will be applied. This reduction, from 50 per cent of GDP previously, will reflect the changed net debt measure.

Australia

The ASX 200 continued its decline yesterday, falling 0.3 per cent to 7328.3 points.

Sectors were mixed yesterday with six of 11 closing in the red. The best performing sector was information technology followed by healthcare, up 1.0 per cent and 0.7 per cent, respectively. The decliners were led by Australian real estate investment trusts and materials, falling 1.2 per cent and 1.0 per cent, respectively.

The best performing stock of the ASX 200 was Magellan Financial Group, closing 5.4 per cent higher last night.

Following the incline was data company Appen, increasing 5.2 per cent on what appears to be no news.

Closing out the top movers was Zip Co, rising 5.0 per cent.

Leading the decliners were horticulture company Costa Group Holdings, down 6.0 per cent, and Premier Investments, decreasing 5.1 per cent.

Rounding out the bottom movers was gold mining company Ramelius Resources.

Woolworths released March quarter sales, revealing a 9.7 per cent increase on the previous year to A$15.12 million despite disrupted supply chains and Covid-19 related team absenteeism. This may have been boosted by the raising of food prices in its Australian supermarkets of an average 2.7 per cent due to inflation. Woolworths closed 0.4 per cent higher yesterday at A$38.44.

The Reserve Bank of Australia (RBA) announced a lift in the cash rate to 0.35 basis points. A combination of easing monetary support put in place throughout the pandemic, the resilience of the economy, hiking inflation and evidence of strengthening wage growth were cited by the RBA as aiding its decision.

Jarden is advising Zip Co on the acquisition of Sezzle Inc.

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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