Australian & New Zealand Market Movers
The New Zealand market (NZX 50 Index, -0.8%) fell on Wednesday but not without a few bright spots occurring in the market. NZX (+2.6%) reaped gains on a market update that Westpac (+2.9%) director Rob Hamilton will become its new chair beginning April 2023 and Datacom’s current CFO will join the board.
The New Zealand Real Estate Institute’s (REINZ) September data showed house prices fall -1.5% and have fallen 11% from their November 2021 peak. Retirement stocks were weaker on the release of this data, including Arvida (-5.1%), Summerset Group (-3.4%), Oceania Healthcare (-1.1%). Real Estate (-1.0%) fell on the day but fared better than the retirement subsector.
The Australian market (ASX 200 Index, 0.0%) ended the day where it started, up only 2.5 points or +0.038%.
Bank of Queensland (+11.1%) experienced its biggest daily gain in two years, after it reported a +15% increase in profit and declared a higher dividend. Financials (+1.9%) and all banks rose on this news with Westpac (+3.8%), ANZ (+3.3%), and Commonwealth Bank (+2.4%) the notable gainers.
Elsewhere, while the Energy (-1.5%) sector was the second worst performer of the day, Coronado Global Resources (+8.0%) surged after confirming that is in take-over talks with NYSE-listed Peabody Energy (+1.1%) for an undisclosed sum.
Europe and US Market Movers
European markets (Stoxx 600 Index, -0.4%) fell on Wednesday as gains in Consumer (+0.6%) stocks were not enough to offset losses in Retail (-1.4%) and Banks (-1.0%).
US markets (S&P 500 Index -0.3%) were choppy after the release of the latest Fed meeting minutes and September’s producer price inflation reading, but untimely closed marginally lower. The Fed minutes contained no new surprises for investors, so the market remained mostly directionless. Although, we might have expected a greater reaction to the Producer Price Index in the US rising by +0.4% MoM in September, the first increase in the index in three months, and double the expectation of a +0.2% increase. Utilities (-3.4%) was the worst performer on the day and Energy (+0.85) the best.
Moderna (+8.3%) notched huge gains after strategic collaborator Merck (-0.7%) said it will exercise an option (at a cost of $250 million) to work on the development and commercialisation of a ‘personalized cancer vaccine’ with the company, which is already in Phase 2 clinical trials.
Tourism Holding (THL: NZX)
Tourism Holdings (+5.5%) shares jumped on Wednesday, at one point rising by almost +7.0% after it lifted its net profit guidance above $30m for the financial year ending 30 June 2023, against previous guidance of $17m – $30.2m.
The company’s improved guidance is a result of first quarter performance in the 2023 financial year, which is exceeding earlier expectations. THL is registering an increase in demand and rental yields for the upcoming high of +35% on 2019 levels in NZ and +70% on 2019 levels in Australia. Margins on vehicles sales continue to perform well against expectations that they would decline through 2023.
THL will provide further detail on regional performance at its ASM on November 1, 2022.
THL is still one of our top picks as a tourism recovery play, and we expect further uplift when the $45 million ATL deal is confirmed by the Commerce Commission. We are BUY (High-Risk) Rated on THL, seeing it as being attractively priced and well placed to benefit from the recovery in international travel, particularly in NZ. Statistics NZ said yesterday that annual arrivals exceeded 1 million for the year ended August 2022, which is a number of tourists not registered in two years. The High-risk rating is partly due to market volatility as well as temporary downside risk if the ATL deal does not go through.
What Markets will be Watching this Week (UTC +13)
Monday
US NFIB Small Business Optimism
Tuesday
AU Westpac Consumer Confidence Index OCT
AU NAB Business Confidence SEP
Wednesday
GB BoE Gov Bailey Speech
Thursday
US PPI MoM SEP
US FOMC Minutes
NZ Food Inflation YoY SEP
Friday
US Inflation Rate YoY SEP
NZ Business NZ PMI SEP
