New Zealand Market Movers
The New Zealand market (NZX 50 Index, +0.6%) lifted on Tuesday despite annual inflation coming in at 7.2% for the September quarter, when the market expected a figure closer to 6.5%. Markets are now beginning to price in the possibility of a 75-basis-points rate hike from the Reserve Bank of New Zealand in November, with a 50-basis-points hike or more almost certain.
Scott Technology (+3.3%) rose after declaring a final dividend of 4 cents per share, taking the company’s total annual return to 8 cents per share, a 33% increase over last year’s total return.
Plexure Group completed its reverse takeover of the Australian firm Task and is now known as TASK Group (+3.1%). At the same time, the software company has moved to a primary Australian stock exchange listing and foreign-exempt NZ stock market (NZX) listing.
Smartpay (+8.0%) shares jumped on the announcement that the company was accelerating customer acquisition and had added more than 1,600 new terminals in the second quarter of the 2023 financial period. Further the company reported an improvement in transaction values moving through those terminals with Australian Total Transaction Value up 145% year-on-year.
Australia Market Movers
The Australian market (ASX 200 Index, +1.7%) rallied on Tuesday with all sectors in the green except for Energy. IT (+4.2%) and Real Estate (+3.2%) outperformed the pack.
The Reserve Bank of Australia’s meeting minutes from October 4 was released yesterday. The minutes showed that the bank expects inflation in the country to peak at ~8.0% by the end of the year (up from its current 6.1%). Even so, members agreed that it would be prudent to slow its hikes for a time to assess the effects of the rate hikes to date. Hence, the bank decided on enacting a 25-basis-points hike.
The Jack Dorsey helmed Block (+10.7%), which acquired Afterpay at the beginning of 2022, rose in a broad-buy-now-pay-later rally. Zip Co (+14.3%), Sezzle (+12.6%), and Splitit (+6.9%) also experienced massive rallies.
Tyro Payments (1.9%) rose for a second day after Westpac (+2.4%) confirmed that it was in preliminary discussions to acquire 100% of the company.
Europe Market Movers
European markets (Stoxx 600 Index, +0.4%) extended their gains for the fourth consecutive day on Tuesday. Construction and Materials (+1.9%) and Automakers (+1.7%) were the top sectoral gainers.
US Market Movers
US markets (S&P 500 Index +1.2%) built on Monday’s rally, with all sectors up on the day led by Industrials (+2.4%) and Materials (+1.9%).
Golman Sachs (+2.3%) rose after reporting third-quarter results that topped profit and revenue expectations. The bank pointed to heightened client activity in bond and currency trading as a driver of its performance for the quarter.
Elsewhere, Salesforce (+4.3%) and Splunk (+2.9%) both surged after it was revealed that activist Starboard Value LP had built a “large” but unknown stake in the former and a ~5% stake in the latter.
Stock Spotlight
Netflix (NFLX: NASDAQ)
Netflix (-1.7%) reported their latest results after the bell and has rallied +14.0% in after-hours trading on the news.
What was learnt: Netflix (NFLX) reversed their trend of decelerating subscriber growth, adding +2.4M subscribers in quarter 3. Revenue grew 5.9% to $7.93B, whilst net profit fell 3.5% to $1.4B. Notably Netflix’s operating margin fell to 19.3% from 23.5% YoY. Management attributed this largely to the strong US dollar relative to other currency. Management expects operating margin in Q4 to be ~4.2% vs. 8.2% a year earlier, as the strong US dollar continues to weigh. We think this is cautiously optimistic news for the embattled streamer, but we note that the valuation is still relatively high compared to peers such as Warner Bros Discovery (+4.6%), Paramount (+1.6%), and Disney (+1.2%). We remain NEUTRAL on the stock. Netflix’s subscriber growth in particular is a positive read-through for competitors, and we expect better Disney+ and HBO Max growth as a result of this.
What Markets will be Watching this Week (UTC +13)
Monday
CN Balance of Trade for September
Tuesday
NZ Inflation Rate for Quarter 3
AU RBA Meeting Minutes
Wednesday
GB Inflation Rate Year-over-Year for September
Thursday
AU Unemployment Rate for September
Friday
JP Inflation Rate Year-over-Year for September