New Zealand Market Movers
The New Zealand market (NZX 50 Index, -0.3%) edged down slightly on Wednesday.
Several stocks gave up bigger gains but still closed higher, including Move Logistics (+5.5%) and Pacific Edge (+1.2%), which peaked at ~10% and ~5%, respectively. NZ King Salmon (+7.1%) reversed Tuesday’s loss of -8.5% after its Chief Executive of 13 years resigned.
Sky Television (+2.7%) advanced after announcing it will be increasing its dividend pay-out range to 60-90% of its free cashflow (excluding one-off items), up from 50-80% previously.
Australia Market Movers
The Australian market (ASX 200 Index, +0.1%) was quiet on Wednesday, gaining marginally on the day. Materials (+1.1%) and Energy (+1.1%) were the only notable sectorial gainers, with the latter support by Crude Oil (+1.4%) flirting with $90 a barrel.
CSL (-0.2%) edged down slightly after announcing a licensing agreement with Nasdaq-listed Arcturus Therapeutics (+18.7%) worth $313 million to improve its mRNA capabilities.
Europe Market Movers
European markets (Stoxx 600 Index, -0.3%) closed lower on Wednesday as investor counted down to the US Federal Reserve interest rate decision. The Danish shipping group Maersk (-5.8%) posted record profit of $10.9 billion for the third quarter due to ‘peak’ high ocean freight rates but fell after warning of slowing demand and cutting its forecast for this year.
US Market Movers
US markets (S&P 500 Index -2.5%) moved much lower on Wednesday. Consumer Discretionary (-3.8%) and Technology (-3.5%) led sectorial losses.
As expected, the US Federal Reserve hiked interest rates by 75-basis-points, taking rates to their highest since January 2008. The market’s reaction was initially muted, but the announcement proceeded to wipe out gains made against US dollar pairs, and worsen the position of stocks, which were only marginally down until the announcement.
Immediately after the Fed rate decision, Chairman Jerome Powell spoke about the need to take into consideration the lag between its rate hikes and the slowdown in the economy that will result but tempered this seemingly dovish language with a note that the banks previously expected peak interest rate will have to be revised upwards.
Stock In Focus
Estee Lauder (EL.NYSE)
Estee Lauder companies Inc shares fell 8.13% after the company slashed its outlook on the back of slowing sales in China and sluggish inventory woes in the U.S. The company lowered its current fiscal year EPS to $5.01 to $5.21 versus an earlier target of $7.11 to $7.33, and sees net sales decreasing ~6-8% year on year.
We remain buy-rated on the stock on a medium-term view, but we revise our outlook to underweight — we don’t expect sales to recover until 2024. We note the stock has already declined +40% YTD and think the market has already priced in most of the China uncertainty, and with all equities across the board see more downside risk over the near term, so investors need to act with patience and caution.
What Markets will be Watching this Week (UTC +13)
Monday
EA Inflation Rate Year-on-Year Flash OCT
Tuesday
AU RBA Interest Rate Decision
Wednesday
US Manufacturing PMI OCT
US JOLTs Job Openings SEP
Pfizer earnings
AMD earnings
Airbnb earnings
Thursday
US ADP Employment Change OCT
US Fed Interest Rate Decision
Estee Lauder earnings
Booking Holdings earnings
Friday
GB BoE Interest Rate Decision
Starbucks earnings
Saturday
US Non Farm Payrolls OCT
Berkshire Hathaway earnings