Global markets were mixed again overnight with the US (S&P 500 index +0.2%) market closing a touch higher after a chopping session, reaching new record highs as Fed Chair Jerome Powell yesterday made comments around remaining supportive of the economy.
Paypal ended the day marginally up after initially surging as it indicated plans to double its active accounts to 750m users by 2025. Mastercard climbed +2.8% after saying it plans to offer support for some cryptocurrencies on its network this year.
The S&P Global Clean Energy (GCE) Index is undertaking a review, the result of which we expect will likely be a material down-weight for Contact (CEN) and Meridian (MEL), which have both benefited from a surge in ETF buying. We would expect to see some form of heavy selling over the near-term and return to more normal valuations post the rebalance set for April.
Telstra (TLS:ASX / TLS:NZX)
Telstra's share price was up 2.5% yesterday after reporting its 2021 half year result. The telco giant reported a -0.4% decline in total income to $12 billion and a 14.2% reduction in underlying operating earnings (EBITDA) to $3.3 billion. The latter was largely due to an estimated in-year NBN headwind of $370m and an estimated $170 million impact from COVID-19.
Positively, Telstra’s free cash flow was strong, allowing the board to maintain its 8 cents per share dividend, also confirming that it plans to maintain its fully franked full year dividend of 16 cents per share.
We are currently BUY rated on Telstra for its attractive dividend and will release a full report in our weekly.
Australia & New Zealand Market Movers
The Australian market was a touch lower yesterday (ASX 200 index 0.1%) amidst a day of mixed company results.
Gold miner Newcrest was a notable performer (+4%) on its first-half earnings, improving net profit after tax by +134% helped by higher gold prices. AMP plummeted -11.3% after reporting a sharp fall in profits down -33% from the corresponding year as well as suitor ARES pulled out of a potential takeover.
The New Zealand market was lower for the third day in a row on Thursday (NZX 50 index -0.5%) driven largely by the sharp decline in renewable electricity generators which were overpriced by offshore index fund buying and as rising bond yields contributing to reassessment of equity prices.
Meridian Energy fell -4.4% percent and similarly, Contact Energy fell -1.4% as they continued its descent towards a fair value share price. Air New Zealand fell -1.6% while its chief executive was at Parliament apologising to MPs for allowing its gas turbines unit to do work for the Saudi Arabian navy which has been blockading Yemeni ports.
Clothing and outdoor retailer Kathmandu fell -1.5% percent to $1.32, after new data showed spending may be beginning to slow.
3 Things Markets will be Watching this Week
- In terms of the week ahead, the US 4th quarter earnings season rolls on, with reports due from General Motors, Twitter, Disney and Coca-Cola among the notable mentions.
- The US CPI (inflation) report on Wednesday will also attract more than usual interest, given simmering fear of an uptick in inflation leading to higher interest rates.
- Earnings season in Australia starts later this week while NZ companies start to report on Monday.