Global markets were mixed overnight (S&P 500 index -0.08%) as the US market remained flat after the Federal Reserve left interest rates unchanged, saying it would continue to support growth by keep easy monetary policy for "some time" before the Fed's objectives are met. The Fed acknowledged that the economy is improving & that inflation has ticked up but reiterated that they see this as transitory.
Earnings season in the US is getting into gear with the heavy weight technology stocks reporting. Google's parent Alphabet shares were up +3%, after reporting better than expected earnings, as revenues rose +34% – its largest growth rate in the last four years. Microsoft shares dipped -2.8% paring Google's gains and holding the broader market back, as despite beating market expectations some of the gains were attributed to PC sales appearing to be covid-19 related and hence seen as only a one-off boost. Apple and Facebook both reported strong results after the bell and are currently trading higher after hours.
European markets (Stoxx 600 +0.0%) held flat, despite delivering a strong set of earnings results investors were cautious, waiting on the US Federal Reserve policy decision.
Summerset shares were up +2.3% yesterday after their AGM, announcing they expect to get consent to build their first Australian village soon. SUM are ready to commence earthworks on the site and expect completion by the start of 2022. Summerset have experienced a strong start to 2021 and guided to develop and complete 500 to 550 units across 14 sites for the full 12 months of 2021.
We continue to remain comfortable with our BUY rating on Summerset as our top pick to gain exposure to the retirement sector. In our view SUM provides much better value to larger peer Ryman and similar exposure to long term demographic tailwinds of an ageing population.
Australia & New Zealand Market Movers
The Australian market traded higher on Wednesday (ASX 200 index +0.4%) after a number of positive trading updates from Coles, Mirvac and Ansell.
The Australian Banks did some of the heavy lifting with the Big 4 advancing around 1%, after a weaker than expected consumer inflation numbers signalled for a less of a need for early interest rates hikes.
Coles shares rose +1.5%, as supermarket sales for the first quarter of 2021 calendar year was lower than the previous year came down to normal level after covid-19 panic buying in March 2020, which was expected. This was up +7% when compared to the same quarter in 2019 performing strongly when compared with pre covid-19 levels. Mirvac rallied +3.1% after the residential property developer upgraded its earnings guidance for the 2021 financial year.
Kogan shares were up strongly (+7.1%) partially recovering from its Monday sell-off, unveiling sales and earnings data in response to the markets harsh reaction to its previous sales data announcement.
The New Zealand market (NZX 50 index +0.2%) was a touch higher on light volume.
AFT Pharmaceuticals had the biggest gain up +12.5% after announcing its first Maxigesic IV licensing and distribution agreement in the U.S, in partnership with Hikma Pharmaceuticals.
Restaurant brands shares were unchanged, despite first quarter sales jumping +29.8% to $259.7m, with about half the growth attributed to the acquisition of 69 Californian stores bought last week.
3 Things Markets will be Watching this Week
- Investors this week will focus on corporate earnings with tech heavy weights such as Microsoft, Alphabet, Apple and Facebook all set to present updates.
- The US Federal Reserve and the Bank of Japan are releasing monetary policy statements.
- President Biden's unveiling of his US$1.5t American Families Plan, and 1st quarter US GDP data Thursday is expected to show 6.9% annualized growth after a more moderate 4.3% rate in the previous quarter.