Global markets were up overnight with US stocks a touch higher (S&P 500 Index +0.2%) as investors cashed in on their technology sector gains, rotating in favour of economically sensitive cyclical stocks, amidst hopes for another round of fresh stimulus to sustain the US economy.
Financial, industrial and energy stocks gave the market the biggest boosts, as the likes of Facebook, Amazon, Netflix and Apple all fell over 1%, but despite the pullback are still up over 5% for the month of July. In stock announcement news, Coca-cola Co (KO.N the US company) shares gained 2.3% after the beverage maker beat earnings estimates, and said demand is improving as management remain upbeat over a near-term recovery.
PGG Wrightson (PGW:NZX)
PGG Wrightson (PGW) shares were down -2.7% yesterday after providing earning guidance for the 2020 financial year (ending 30 June 2020), expecting operating earnings (EBITDA) to be between $23m to $24m. This is down from previous year's result of $24.5m, and down from pre-covid expectations of ~$30m. Parts of their business were disrupted by covid-19, but PGW appears to have down well to come out relatively unscathed given the challenging operating conditions. More details will be provided when they report their full year result in August.
We maintain our High-risk BUY rating on PGW, as a relatively resilient business amidst an economic slow down, but we are wary of agriculture related risks and its full valuation
Australia & New Zealand Market Movers
The Australian market rose strongly Tuesday (ASX 200 Index 2.6%) to reach a new four-month high, as the market shrugged off concerns over the spread of covid-19 amidst hopes of possible vaccine and extended JobKeeper payments up until march to keep the economy afloat. The tech sector continues to make strong gains leading the market higher, following a strong tech lead by Wall Street which saw Afterpay (+8%), Xero (+5.6%) Nearmap (+11.2%) Appen (+6.7%) WiseTech Global (+4.5%) at $22.12 and NEXTDC (+5.7%) all surge higher.
Gains were broad based with all sectors in the green, with healthcare, financials and miners also doing well, despite a slip in iron ore prices.
BHP was up +1.1% after reported its biggest ever sales volumes in a three-month period during the June quarter, capitalising on elevated iron ore prices. While more defensive stocks performed poorly as Telecommunication stocks ended the day lower.
The New Zealand market climbed higher yesterday (NZX 50 Index +1.6%) as tech stocks around the world rallied strongly as well as promising vaccine news and addition stimulus relief globally boosting investor sentiment, resulting in broad based gains.
Kathmandu Holdings was the best performer of the day, rising +4.5% followed by SkyCity Entertainment Group up 4.1%, as the market was driven by liquidity and optimism as investors increased their risk appetite. Market heavy weights A2 Milk, Fisher and Paykel Healthcare, Infratil and Genesis all made sound gains helping to drive the index higher, whilst virus sensitive stocks were mixed.
3 Things Markets Will be Watching this Week
- Covid-19 newsflow around a second wave and re-opening of economies remains top of mind
- It is going to be another huge week ahead for corporate earnings with Amazon, Microsoft and Tesla all scheduled to report.
- Locally, Oceania Healthcare will release full year earnings, Sydney Airport will provide a quarterly update and production reports are due from BHP, Evolution Mining, Oil Search, South32, OZ Minerals, Beach Energy, Lynas, Northern Star, Newcrest Mining and Santos.