Global markets were mostly lower overnight, with the US market (S&P 500 index -0.5%) falling for a fourth straight session – following ”better-than-expected” jobs data. Investor sentiment remains in a risk off mode with profit taking as timing of central bank stimulus tapering & relentless spread of delta remains the focus.
US jobs data which showed new jobless claims fell to a post-pandemic low and continuing unemployment claims also declined modestly – hinting towards stimulus withdrawal and tightening of loose monetary policy settings sooner rather than later.
US-listed shares of Chinese gaming companies NetEase (-11.0%) and Huya (-8.5%) plunged, and US peers Activision Blizzard (-2.9%) and Take Two Interactive (-1.4%) fell in sympathy after reports China has slowed the approval of new games and plans to enforce restrictions on gaming for children.
European markets ended the session virtually flat (Stoxx 600 index, -0.06%) as the ECB kept its monetary policy unchanged on Thursday but opted to slow down the pace of net asset purchases under its pandemic emergency purchase program – which was a less hawkish tone than the market had anticipated.
Fletcher Building (FBU:NZX / FBU:ASX)
Fletcher Building (FBU) shares have been under pressure in light of the recent lockdown imposed in New Zealand halting construction activity, particularly in Auckland which looks set to be for a longer period. The good news is that the Government confirmed that building supplies can be made even during level 4 – with plasterboard, gypsum plaster, coated roofing steel and insulation being approved, while the ret of the country has moved down lockdown levels.
We maintain a BUY rating on FBU but given its current valuation it is now more fairly priced and adjusted to favourable operating conditions. Hence, we maintain high-risk caveat, as any slip in residential construction activity is a potential risk given its FBU’s highest source of revenue. FBU will suffer some earnings pressure from the current lockdown especially if level 4 was to be dragged out. However, these risks are minimised as construction can occur at level 3 or lower, and looking through the lockdowns economic activity is expected to remain relatively robust over the near term.
Australia & New Zealand Market Movers
The Australian market was down significantly yesterday (ASX 200 index -1.9%), amid global equity sell-off.
All ASX sectors traded in the red, with Aussie technology stocks leading losses heavy losses for major US and Asia based tech companies.
Materials were hit hard, as price of iron ore slipped more hitting the major miners, as well as many of the smaller miners. Travels stocks were also hit hard as NSW reported 1405 new cases and Victoria adding 324 new cases, except for Sydney Airport which was just a touch lower down -0.1%.
All four major banks also suffered sizeable losses as well as Macquarie following its record run.
Resmed was of the few in the green up +1.8%, as a benefactor of rising covid cases.
The New Zealand market was down on Thursday (NZX 50 index -0.8%) following trends globally.
Locally, it appears investors’ were on the cautious side as well as taking profits given the strong rally the last month, with losses across most of the board.
Plexure Group led losses falling -7.5%, followed by Kathmandu which fell -4% despite the retailer benefitting from retail trade returning across the country. While on the flip side Sky TV was the best performer up +4.9%.
Pacific Edge slipped -2.1% after reiterating it was not raising capital, despite providing the ASX with detailed plans for a $72m raise at $1.24 per share. Ebos shares were down -1.6% as it traded ex-dividend.
3 Things Markets will be Watching this Week
- In a quieter week, Chinese trade data will be closely watched given the growing concerns around the state of the Chinese economy. .
- Central Bank Meetings in Europe (ECB) and Australia (RBA).
- Covid-19 and lockdown related announcements locally.