Global markets were mixed overnight (S&P 500 Index +0.5%) as US stimulus talks, jobless claims and a surge in coronavirus cases across Europe kept financial markets cautious.
The number of Americans filing for state unemployment benefits last week dropped more than expected to 787,000, but remained stubbornly high. The market rebounded off its earlier lows after House Speaker Nancy Pelosi reportedly said a stimulus deal was "just about there".
In stock news, Tesla shares were higher after reporting its fifth consecutivee quarterly profit and record revenue of US$8.8bn.
Auckland Airport (AIA:NZX / AIA:ASX)
AIA shares bounced yesterday after its AGM where it announced 1st quarter operating earnings were ~NZ$10m per month, although as expected no full year guidance was provided.
The result has been underpinned by property and domestic passengers. The post-Covid passenger full recovery outlook is unchanged with international at least 3 years away with management hopeful of a domestic recovery within 2 years. The company is also expecting to see 2-way quarantine free travel on Tasman and Pacific Island earlier than long haul timeframes.
AIA’s underlying business is in a strong financial position thanks to its capital raise earlier in the year and can comfortably weather a delay in opening international borders due to the relatively low-cost nature of the business and supportive levels of domestic travel, helping to avoid significant cash-burn.
We remain comfortable with our BUY rating on AIA as our preferred way to play a recovery in tourism and re-opening of borders. Significant upside potential now rests on a vaccine and return of international travel, which is now a medium term play.
Australia & New Zealand Market Movers
The Australian market slipped yesterday (ASX 200 Index +0.3%) with the major banks leading losses.
In stock news, Santos' shares fell -1.5% despite boosting quarterly production by 22%, while Woodside’s (-1.6%) production was in-line with estimates and guidance, but lower realised prices resulted in weaker than expected revenue for the period.
The media is reporting that large private equity players, including KKR, are engaged in detailed work to gauge whether to get actively involved in a tilt for some or all of AMP. AMP's board is aiming to give investors an update on its strategic review before year’s end.
Buy now pay later company Zip, saw its shares fall -5% after Westpac said it was selling its entire stake in the buy now, pay later business, raking in $366 million from the sale of its 55 million shares.
The New Zealand market continued to trend lower (NZX 50 Index -0.2%) with almost as many stocks in the green as in the red. Restaurant Brands (+1.9%) reported robust 3rd quarter sales, driven by the inclusion of its Californian acquisition for the first time as well as strong sales in existing businesses.
The big news on the NZX was the listing of RUA, the first IPO since Napier Port last year. Medicinal cannabis company Rua Bioscience jumped 40% to 69 cents as it was floated on the NZX. The medicinal cannabis producer is the first listed company headquartered in Tairāwhiti, the first founded by a Māori community. RUA will target medicinal cannabis exports in the first instance, and has a distribution agreement with a German wholesaler and license to produce medicinal grade products at its facilities in NZ.
3 Things Markets Will be Watching this Week
- The week ahead is dominated by corporate earnings in the US with key names reporting including Netflix, Tesla, Procter & Gamble, and Coca-Cola.
- In the US we will also see the release of 3rd quarter GDP figures and the last US presidential debate.
- Locally, CSL will host an investor briefing while Mirvac and AMP will provide quarterly updates and a number of companies are hosting AGM’s including Origin Energy, Crown, Magellan Financial, Webjet, and Qantas.