Global markets continued to edge higher overnight (S&P 500 index +0.1%) with the Us market making modest gains following solid result from technology giants. Alphabet (Google's parent company) shares jumped +9% as it benefited from lock downs that drove retail and other advertisers online.
Amazon shares fell despite earnings smashing market expectations following Jeff Bezos' surprise move to step down as chief executive.
Closer to home, The official unemployment rate in New Zealand fell to 4.9% in the December quarter, significantly lower than the 5.9 percent economists had expected. This suggests tightening monetary policy sooner to avoid overheating an economy which is recovering faster than anticipated. We think interest rates could rise sooner than many expect, and there is a real possibility the Reserve Bank of NZ will increase the official cash rate (OCR) as opposed to holding them flat at record low levels – the market is now pricing in 55% chance of OCR hike in November.
Sky TV (SKT:NZX)
Sky TV (SKT) shares led the market higher yesterday climbing +12% after lifting its revenue guidance for the 2021 financial year for the second time. SKT expects revenue for the financial year to reach between $695m and $715m, up from November’s $680 million to $710 million estimate, which is a ~5.5% decline from the previous year stating it is seeing “improvements in our satellite customer loyalty alongside further growth in our streaming revenues".
We continue to believe SKT business is set to continue to struggle, however this is negativity is now reflective in its depressed share price and we change our recommendation from a SELL to a HOLD, but would continue to avoid the stock.
Australia & New Zealand Market Movers
The Australian market was higher yesterday (ASX 200 index +0.9%) for a third session in a row, after the Reserve Bank of Australia said the economy is set for "very significant monetary support" for years to come, with rates unlikely to change from the 0.1% setting until 2024.
The real estate sector was the best performer while banks also performed strongly hinting that much of their provisions last year may be reversed in a better performing economy and there is potential for a return to divided pay-outs similar to "pre-covid" levels.
Most of the miners edged lowers as silver, copper and iron ore prices all pared gains after strong runs.
The New Zealand market rose on Tuesday (NZX 50 index +0.4%) largely due to news on better employment numbers and faster than anticipated economic recovery. However, many stocks priced for ultra low interest rates over the long-term were caught up in selling – which saw Contact Energy and Spark both post the largest fall down -1.9%.
Fletcher Building climbed +2.4% buoyed by employment data showing the construction industry employed an extra 13,200 people in the December quarter, and Fonterra Shareholders' Fund units was up +0.4% after the dairy co-operative hiked its forecast payment to farmers.
3 Things Markets will be Watching this Week
- It is the second biggest week of earnings with 113 S&P 500 companies reporting including: Amazon, Alphabet, Alibaba, PayPal, Pfizer, Merck, Exxon Mobil, Unilever, Royal Dutch, UPS, Siemens AG, Philip Morris, Glaxo, Gilead and BP PLC.
- The RBA makes a Cash rate decision on Tuesday
- US employment (Nonfarm payrolls) data is released at the end of the week.
Team
