Global markets were little changed overnight, as the US market (S&P 500 index -0.2%) edged lower ahead of the Federal Reserve and other central banks meetings this week. The meetings are in focus given the move in interest rates higher lately, and investors will be looking at whether regulators will indicate they will retain supportive policies in the post-pandemic recovery.
US stocks retreated late in the session, with the Tech Nasdaq index shedding more than a 1% gain, as yields on longer-maturity US Treasury bonds ticked up, nipping investor enthusiasm for tech-stocks that are high growth but wary of rising inflation.
The US dollar edged up against the euro and commodity currencies such as the Australian and New Zealand dollar as the two-day Fed meeting kept trading subdued..
New Zealand King Salmon (NZK:NZX)
New Zealand King Salmon (NZK) shares remain under pressure as it navigates through disruption to its business caused by covid-19. It released an encouraging result for the first half of its 2021 financial year, where sales volume remained flat, but pricing was affected by restrictions on food service particularity in the US and Europe, operating net profit after tax fell -58% from last year down to $3.66m.
It appears NZK, has survived the worst of the situation without significant cash burn. We continue to remain BUY rated at current levels with a high risk caveat (given production risks and lingering covid impacts hurting exports) as we believe NZK has premium product with strong demand likely to recover as vaccine roll-outs ease restrictions in NZK's key markets.
Australia & New Zealand Market Movers
The Australian market closed higher yesterday (ASX 200 Index +0.8%), driven by a strong session for tech stocks as government bond yields eased and meetings minutes underscored the Reserve Bank of Australia's unwavering monetary support.
Tech stocks led the rally with the buy now pay later lenders leading the pack, Xero gained +4%, Afterpay was up +3.1% and Zip advancing +3%. Miners and energy stocks also sold through the session, BHP and Rio both slipping -2.2% and -1.1% respectively reflecting fresh pressure on the iron ore price which is most recently being challenged by a pollution crackdown in China.
The New Zealand market was up on Tuesday (NZX 50 index +0.8%) for the fifth day in a row, following a positive lead from US markets as national vaccinations ramp up.
Electricity generator Mercury NZ led the local market higher, climbing up +5.3% as investors digested its purchase of Tilt Renewables’ NZ assets. Briscoe Group jumped +5.6% as it continued its track record of under-promising and over-delivering by posting a $73.2m annual net profit ahead of an estimated $70m.
3 Things Markets will be Watching this Week
- Highlight this week include the latest US Federal Reserve rate decision and Fed Chair Jerome Powell’s news conference along with rate calls from the Bank of England and Bank of Japan. The announcements will be watched closely given the recent move in interest rate markets.
- In Australia, the latest minutes from the recent RBA meeting are due along with employment and retail sales data.
- In NZ, 4th quarter economic growth (GDP) data is scheduled for release later in the week while Briscoe Group, Fonterra and The Warehouse Group will all report earnings.