Global markets were mixed overnight (S&P 500 Index -0.5%) reversing gains late in the day as losses in technology shares outweighed a Federal Reserve statement that initially stoked optimism as Chairman Powell said the Fed would keep US interest rates near zero for a prolonged period.
The Fed kept rates near zero and promised in its policy statement to keep them near there until inflation is on track to “moderately exceed” the US central bank’s 2% target “for some time.”, with predictions of interest rates to remain on hold until 2023.
The technology sector, which had been recovering from a sharp sell-off, fell -1.6% on the day, the biggest drag on the benchmark index as investors took profit. The broader market was generally up led by energy stocks as the price of oil jumped +4.7%.
Spark New Zealand Limited (SPK:NZX)
Spark (SPK) shares were higher yesterday (+1%) after it held its investor day, highlighting its three year plan to simplify and continue to grow its business.
The key would be to continue to grow its core mobile business, as well as expand into future markets such as cloud security, IT services, and sport which should offset declining voice business and broadband which is likely to remain flat.
Expanding their product offering, while simplifying current processes should put SPK in a position to be able to grow its currently reliable and attractive dividend.
We continue to remain BUY rated on Spark
Australia & New Zealand Market Movers
The Australian market was up on Wednesday (+1%) after a positive lead from the US technology sector set up local growth companies for a strong session. All major sectors were up, with Aussie Tech companies leading the charge, particularly the "buy now pay later", as After Pay jumped +4%.
Job advertiser Seek was the best performer of the day, which surged up +9.4% on reports that Chinese e-commerce giant Alibaba was considering an investment worth hundreds of millions of dollars in Seek's online job ads business in China, called Zhaopin.
Kogan.com jumped +6.1% after the company provided a strong trading update, as the number of active customers grew by 152,000 last month to around 2.5 million and gross profit in August jumped +165%, compared to the same period last year.
The New Zealand market was up yesterday (NZX50 Index +0.4%), partly helped by a strong lead from Wall street as well as a less gloomy outlook for the local economy as the Treasury said the peak unemployment rate would be lower than initially anticipated at 7.8% (versus 9.8%), but the recovery would also be slower.
Retirement village operator Arvida was up +2.5% yesterday after reporting solid sales results for the second quarter.
Auckland International Airport reported total passenger volumes was down -85% for the month of August compared to the same month a year earlier. That was a sharper year-on-year decline than in July due to the Auckland lockdown restricting domestic travel as well. Air NZ is proposing to make 385 more cabin crew redundant by December, adding to the more than 4000 staff that have been let go since Covid-19 restrictions took hold in March.
3 Things Markets Will be Watching this Week
- COVID-19 related -flow remains key, with second wave and lockdown headlines, while US Congress debate what an extension of stimulus will look like.
- The key event this week is the US Federal Reserve Interest rate decision, which will be followed by Fed Chair Powell’s news conference.
- Locally, NZ’s Q2 GDP data and Australia’s latest employment data are both due on Thursday.