US markets (S&P 500 Index +0.7%) overcame an immediate low opening to close the day positive. Even so, investors are on edge for the Fed interest rate meeting that arrives on Thursday (NZDT). A 100-basis-points hike will likely unnerve Wall Street. US Treasury rates are up to fresh highs, with the 2-year rate just under 4% and the 10-year rate breaking above 3.5%. The USD remains well supported, while the NZ dollar continues to underperform, falling to fresh multi-year lows against the USD and AUD.
In other news, US President Joe Biden announced that the Covid-19 pandemic was over in the US in an interview with 60 minutes that aired Sunday night. As such, Consumer discretionary (+1.4%) stocks moved higher on the day. Some of the best performers included Marriott (+1.6%), Hilton (+1.2%) and Wynn Resorts (+0.7%), along with airline stocks American (+3.4%), United (+3.3%), and JetBlue (+3.0%).
European markets (Stoxx 600 Index, 0.0%) were flat as news flow was light, and trading has been cautious ahead of a busy end to the week.
KMD brands (KMD: NZX)
KMD Brands (-2.9%), previously known as Kathmandu Holdings, fell hard on Monday in the lead up to the release of its 2022 financial year results. KMD now trades at $1.00 per share and approaches oversold conditions according to the Relative Strength Indicator (RSI).
KMD brands intends to release its audited results for the 12 months ended 31 July 2022 this morning, with a briefing session for investors at 10:30am NZST.
It will be interesting to see how elevated energy costs have affected the company’s margins and freight expenses, especially as direct-to-consumer online sales continue to rise for the group.
We remain upbeat on KMD as it enters a period of normalised operations and maintain our BUY (High risk) rating. We expect KMD to benefit from increased travel and increased demand for its travel and outdoor related products. Additionally, we believe KMD is more attractively valued to many overvalued ‘stay at home’ retailers, which have surged and likely hit peak sales growth levels.
Australian & New Zealand Market Movers
The Australian market (ASX 200 Index, -0.3%) slipped lower on Monday and now sits at its lowest level in 2 months. ASX 200 futures point to Australian shares rising on Tuesday though with the positive turn in the US.
A spanner in the works could be RBA’s policy minutes, which are released at 11:30am AEST today.
The New Zealand market (NZX 50 Index, -0.4%) closed lower on very light trading.
Synlait Milk (+1.7%) rose to $3.57 after completing the first stage of two decarbonsation projects which will reduce its greenhouse emissions by 58,000 tons annually by 2026.
Companions, A2 Milk (1.4%) fell on the day to $6.15, and Fonterra Shareholders’ Units (0.0%) were flat ahead of its full-year results on Thursday.
What Markets will be Watching this Week (UTC –4)
Monday
Japan Inflation Rate YoY (AUG)
Australia RBA Meeting Minutes
Tuesday
Canada Inflation Rate YoY (AUG)
Wednesday
US Fed Interest Rate Decision
BoJ Interest Rate Decision
Thursday
BoE Interest Rate Decision
Friday
US Fed Chair Powell Speech