Global markets were higher overnight, with the US market (S&P 500 index, +0.4%) marking its sixth positive day in a row, as investors were relieved by the Federal Reserve’s patient stance on raising interest rates – sending bond rates lower.
The news sent most sectors higher with tech stocks leading the charge, although the major banks were lower Goldman Sachs (-2.9%), JPMorgan (-2.1%) and Travelers (-2.0%). Chip maker Qualcomm jumped +12.7% after issuing a better-than-expected outlook due to surging demand for chips in phones, cars and internet connected devices; rival Nvidia also soared +10.8%. Moderna shares cratered -17.8% after the drugmaker slashed its covid-19 vaccine revenue outlook.
On the data front, US jobless claims totalled 269,000 for the week ended Oct. 30, the lowest pandemic-era total and better than the 275,000 expected by economists polled by Dow Jones.
European Markets (Stoxx 600 index +0.4%) were up as the Bank of England left interest rates unchanged and left its QE buying unchanged till the end of the year, surprising the market. It seems the Bank of England are following the lead of the Fed, European Central Bank, and Reserve Bank of Australia in terms of delaying interest rate hikes for as long as possible despite a jump in inflation.
Oceania Healthcare(OCA:NZX)
Retirement village operator Oceania shares have been under pressure lately, as a significant chunk of its retirement villages (44%) are in Auckland and lockdown restrictions are disrupting sales.
Strong house price growth has been a positive for the sector and the main contributor to the boom and recovery since covid. We believe house price growth will come under pressure especially in 2022 given the high base currently and given interest rates are set to rise further, which could put some near term pressure on the sector.
We still rate Oceania as a BUY on a medium term view, due to the strong demand for aged care, and its more attractive valuation (compared to larger peers), which also implies it should better weather any house price weakness that should that arise. We see Ryman as the least desirable retirement village due to trading at a much higher premium, and having the highest debt levels.
Australia & New Zealand Market Movers
The Australian market was up yesterday (ASX 200 index +0.5%).
It was a solid session for Technology and financial stocks which lifted the market higher, offsetting weakness from energy stocks slipping on higher stockpiles bringing the price of oil lower. Iron ore miners were also weaker despite the bulk commodity clawing back Wednesday losses.
Dominos Pizza suffered the largest loss down -18.4% after reporting stumbling sales in Japan and warned of higher. Afterpay shares were up +2.4% after shareholder of US payment giant Square approved the issuance of shares to acquire Afterpay under the $39 billion deal.
The New Zealand market was down on Thursday (NZX 50 index -0.4%) with property stocks leading the market lower.
Precinct Property, one of the largest owners of inner-city office and retail space told shareholders that rent abatements were costs about $500,000 per week or 3% of its rental income and that free rent to retailers weren’t enough to avoid closure. The news, as well as fear of rates rising faster than anticipated sent all property stocks lower; argosy (-1.9%), Goodman Property Trusts (-1.8%), Kiwi property Group (-1.7%) and Precinct (-0.6%). Summerset, which is more influenced by the residential market led losses down -2.4%.
3 Things Markets will be Watching this Week
- Key events this week include RBA announcement, Fed meeting this week, Bank of England announcement, and employment data (nonfarm payrolls) in the U.S.
- US Third quarter Earnings continues with Pizfer, T-Mobile, Uber, and Lyft among those reporting this week
- Locally, earnings from Westpac, Goodman Group, Amcor and Z Energy, quarterly updates from and AGM’s being held by Worley, Domino’s Pizza, Qantas, Spark NZ and Precinct Properties.