US markets (S&P 500 Index +0.2%) ended a choppy session higher overnight, as mixed economic data and earnings failed to provide the market with a clear direction.
Existing home sales for July fell -5.5% from the previous month, while weekly jobless claims remained stable. Retailers were mixed on their results – Khol’s was down after cutting its sales and profit estimates due to cost inflation, while BJ’s Wholesale jumped on an earnings beat.
European markets (Stoxx 600 Index, +0.4%) rose following a similar choppy pattern on Wall Street, as inflation concerns kept investors in a cautious mood.
Closer to home, Australia’s unemployment rate fell to 3.4%, its lowest level in 48 years. The implication is that it leaves the Australian economy in a strong position to withstand further monetary policy tightening (increases in interest rates) from the Reserve Bank of Australia to combat inflation.
Auckland Airport (AIA:NZX)
Auckland International Airport shares fell -3% yesterday after delivering its 2022 full year result, which thanks to revaluation gains of its investment property helped delivered a reported profit of $191.6m.
A gradual recovery in international travel late in the year mitigated operating losses. But the company’s outlook was softer than expected leaving investors that had patiently waited for good news slightly disappointed, while management also announced a large capex spend of $600m to $700m for 2023 – significantly larger then pre-covid levels.
We are Hold rated on Auckland International Airport due to its expensive valuation meaning we see limited upside over the medium-term, and a recovery to pre-covid level of peak tourism is still some time away. We like the fundamentals that drive the business but would prefer to be buyers at lower share price levels.
Australia & New Zealand Market Movers
The Australian market (ASX 200 Index, -0.3%) was down on Thursday, on a mixed day of earnings results, and strong labour market data.
The latter put pressure across the market with most sectors lower, with tech leading losses. Xero shares were down -7.1%, when it held its AGM. While revenue growth was in line with expectations, there were concerns with subscriber numbers in the UK, a key market for growth for the company.
Energy and Healthcare were the only sectors in the green, the latter benefiting from CSL rebounding from its post earnings sell-off.
Blackmore’s group slumped -10.1% after delivering solid revenue and profit growth, and warned investors rising costs and supply chain issues will be an ongoing headwind.
On the other hand, Treasury Wine Estate shares rose +4%, the second-best performer of the day as profits rose on improving pricing and margins, despite revenue falling.
The New Zealand market (NZX 50 Index, -0.3%) was down on a mixed day of earnings, weighed down by Auckland International Airport result, the NZX’s third largest company.
Tourism Holdings was one of the better performers rising +2.7% on the back of a strong recovery in international travel by Auckland International Airport.
Skellerup rose +1.7% after its profits came in ahead of expectations, while Precinct Properties shares fell -1.7% on their result which was mostly inline but management guided to a softer dividend than the market had expected for 2023 financial year.
Things Markets will be Watching this Week
Monday
Global: US NAHB Housing Market Index, China retail sales data
Australia: Earnings from Beach Energy, Bendigo & Adelaide Bank, JB Hi-Fi, Quarterly update from Westpac.
New Zealand: Earnings, Contact Energy
Tuesday
Global: Earnings from Walmart and Home Depot
Australia: RBA Minutes, Earnings from BHP, Challenger, Goodman Group, and James Hardie
New Zealand Earnings from Mercury and PGG Wrightson.
Wednesday
Global: US Retail sales data and Fed Meeting minutes release, Eurozone second quarter GDP and employment data, and earnings from Target.
Australia: Earnings from Brambles, Corporate Travel, CSL, Downer EDI, Magellan, Santos, Super Retail, Vicinity Centres.
New Zealand: RBNZ’s cash rate decision (OCR), and earnings from Fletcher Building
Thursday
Global: US Existing home sales data, US initial jobs claims, and Eurozone inflation (CPI) data
Australia: Employment data, and earnings from Blackmores, Evolution Mining, Transurban and Treasury Wine.
New Zealand: Earnings from Auckland International Airport, Precinct Properties, and Skellerup.
Friday
Australia: Earnings: Accent Group, AGL, Cleanaway, Cochlear, Inghams, and TPG Telecom.
New Zealand: Credit card spending data and earnings from Genesis Energy.