Global markets were weaker overnight (S&P 500 index -0.3%) amidst a very volatile session.
Markets have traded with a risk-off tone overnight, with equities and commodity prices falling and the USD strengthening. US Treasury yields have increased after the Fed minutes said a number of members thought it might be appropriate to start discussing tapering in upcoming meetings. The Fed hinted that the recent pick up in economic activity would warrant discussion about tightening monetary policy in the coming months – adding that the current recovery is still "uneven and far from complete".
There were also more inflationary concerns following rising consumer prices in both Europe and UK. Sector wise, the Energy and Material sectors were hardest hit as commodity prices were weaker.
Crypto currencies plunged across the board last night after Chinese officials banned the country's financial and payment services industries from providing cryptocurrency. Bitcoin junkies had wild night with -31% plunge in morning & +33% in the afternoon. Companies associated with Cryptocurrencies fell such as Coinbase (-6.0%), Mastercard (-1.4%), Square (-2.3%) and Paypal (-0.1%), the latter accepting crypto payments, while Tesla lost -2.8% due to their extensive Bitcoin holdings. Target shares were up +5.3% after delivering solid result, while TJ Maxx and Lowes were lowering despite beating expectations.
Major European markets (Stoxx 600 -1.5%) fell as investors grew concerned about the need for central banks to raise interest rates as Eurozone consumer prices rose +1.6% over the last year.
Infratil (IFT:NZX)
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Diversified investment company Infratil (IFT) shares were up +0.3% yesterday after releasing their 2021 full year result, which included a net loss of $16m due to a net adverse impact form hedge contracts in place through extreme cold weather in February.
The company's preferred measure proportionate operating earnings (EBITDAF) came in at $398.8m which was up +7% from last year. The highlight being strong earnings guidance for 2022, and a slight increase in dividends after years of holding it flat. Inftail also signalled that dividends would start to progressively increase, hinged towards stable cash flow growth from its Vodafone business.
We continue to remain BUY rated on Infratil, given their track record have faith to reallocate their cash from the Tilt renewable sale. IFT also invest in long term themes we are bullish on such as data and renewable energy.
Australia & New Zealand Market Movers
The Australian market fell heavily yesterday (ASX 200 index -1.9%), its biggest fall since February as investors absorb the cost of inflation in some earnings results and question the staying power of record high commodity prices. The RBA has signalled it will wait until wages begin to rise before considering a shift to it pandemic-era monetary policy
All sectors were in the red, with energy and materials hardest hit, with added pressure coming from China due to fears it will weaponize iron ore next .
Appen shares were the best performer up +17% after announcing a new organisational structure and new reporting segments.
On the flipside EML payments tanked -46% after its Irish regulated subsidiary received correspondence from the Central Bank of Ireland (CBI) raising significant regulatory concerns relating anti money laundering and counter terrorism financing, risk and control frameworks and governance.
The New Zealand market fell on Wednesday (NZX 50 index -1.2%) as inflation woes outweighed earnings results.
The gentailers all traded lower being sensitive to a potential rise in interest rates, Mercury falling the hardest amongst the group down -4.3%.
Travel software operator Serko's shares fell -6.7%, after reporting a net loss of $29.4m which came as no real surprise to the market.
Argosy property fell -2.6%, giving back its pre earnings gain to be up marginally over the last 5-days as the property developer said its annual net profit had more than doubled due to $157.7m worth of unrealised property revaluation gains – a solid result.
3 Things Markets will be Watching this Week
- Key events this week include the latest US Federal Reserve minutes, US housing starts and existing home sales, Inflation prints across Europe, PMI data across much of the globe and a dump of Chinese data on Monday including Industrial Production and Retail sales.
- This week 20 S&P 500 companies are due to report along with some of China’s largest companies and a few large international companies including Walmart, Home Depot, Lowe’s, Target, VF Corp, Ralph Lauren, Cisco, Applied Material, Tencent, JD.com, Baidu Inc, Vodafone and Porsche SE.
- Locally, the latest employment data in Australia is due along with earnings releases from Incitec Pivot, Trustpower, James Hardie, Kiwi Property, Webjet, Infratil, Serko, Ryman Helathcare, Aristocrat, My Food Bag and Oceania Healthcare.