Global markets were mostly higher overnight, with the US market edging higher (S&P 500 Index +0.3%) as investors extended their rotation into value stocks from the high flying tech sector.
The market continues to await news on the progress around an extension of the US fiscal support bill which includes covid-19 unemployment payments. Providing some support however, US President Donald Trump signed executive orders that partly restored enhanced unemployment benefits after talks between the White House and top Democrats in Congress about fresh stimulus broke down last week.
It also appears the market is becoming more hopeful given a potential covid-19 vaccine, historic fiscal and monetary support, and more recently, better-than-expected second-quarter corporate earnings.
Locally, NZ’s PM has announced she is hopeful a travel bubble between the Cook Islands and NZ will be implemented by the end of 2020.
Myer (MYR:ASX)
Myer shares were lower after the beaten down retailer announced trading conditions were severely impacted by covid-19, as 60 stores were closed in late March, with stores progressively reopening. This has been partially offset by strong acceleration in growth in online sales, however following the next stage of restrictions by Victorian government, its Melbourne metropolitan stores will remain closed, with select few offering click and collect.
With cost cutting initiatives and support from the Federal government via JobKeeper and rent relief and deferrals, Myers expects to report a small cash positive position by the end of its 2020 financial year.
We remain HOLD rated on Myer, as despite its "cheaper" valuation there is a heightened level of risk for its turnaround with covid-19 creating huge uncertainty
Australia & New Zealand Market Movers
The Australian market climbed strongly on Monday (ASX 200 +1.8%), amid signs Melbourne's covid-19 cases peak point could possibly have passed, as well as stronger than expected jobs data reported in the US.
There were strong gains across all major sectors with the major banks leading the market higher, rallying hard ahead of the release of Commonwealth Bank's full-year result later this week. Rio Tinto, which has benefited from stronger iron ore prices, led the market declines, falling as the fallout from the destruction of the 46,000-year-old heritage site within Juukan Gorge continues.
The retail sector performed well, as online retailer Kogan.com jumped +10% yesterday after announcing sales were up +110% for the month of July compared to the same corresponding period last year. Being fully online Kogan was immune to the lockdown in Australia, while the news helped lift other retailers with online sales channels higher as well.
The New Zealand market edged higher yesterday (NZX + 0.3%), on the back of a strong lead by the Australian market. Contact energy shares rose +2%, despite reporting a -64% decline in 2020 full year net profit due to lower wholesale prices and production. Contact managed to maintain its full year dividend of 39 cents per share, unchanged from last year.
Kathmandu shares were up +3.6% as the Australian market rose higher as well as benefiting by stronger online Australian retail sales data as well from its retail peers. The NZ dollar also eased slightly, which saw heavy-weight exporters A2 Milk, and Fisher and Paykel Healthcare climb higher.
