Global markets were mostly higher overnight, with the US market ( S&P 500 +0.3%) hitting its 54th record closing high this year as US jobless claims reached pandemic lows.
With jobless claims hitting a pandemic low, there is definitely some optimism as investors look ahead to the full jobs picture due later tonight. However, with Fed Chair Powell having explicitly linked the timing of a tapering (cut back in stimulus) announcement with labour market developments, the market is likely to be sensitive to a major surprise in either direction. The consensus is that the Fed will wait until November to make a tapering announcement. In saying that, a very strong payrolls report might see the market contemplate a September tapering announcement.
Most sectors were in the green with energy stocks leading the market helped by rebound in price of oil, followed by healthcare and industrial sectors. Tech stocks were the laggards with Facebook down -1.8% after its messaging service WhatsApp has been fined a record 225 million euros ($267 million) by Ireland’s data watchdog for breaching EU data privacy rules – which is being appealed.
European Markets were up overnight (Stoxx 600 index, +0.3%) as traders anticipate strong US jobs data as optimism over improving economic growth boosted cyclical stocks.
Ooh! Media! (OML:ASX)
Out of Home advertiser OML shares have been volaille the last few months as lockdowns on both sides of the Tasman are set to dampen outlook for the third quarter, overshadowing a modest recovery for the first half of the year – most recently been recovering due to better than expected Aussie GDP numbers for the second quarter leading for a strong fourth quarter post-lockdown.
For the first half of the 2021 financial year OML delivered revenue of $251.6m and operating earnings (EBITDA) of $33.3m as it made a bit of a recovery late last year. OML management welcome news around vaccines meaning there is a path back to normality. What was encouraging in the latest result is part of their business (Road, Retail, Street Furniture and NZ) did stage a healthy recovery and appears to have almost fully recovered in the month of January 2021. While uncertainty has returned, the trans-Tasman bubble did help support the heavily encumbered fly division.
We continue to believe OML holds strategic assets, which should be able to extract value over the medium-term given improving economic outlook and that most companies are in a comfortable position to maintain or increase their advertising spend – although the growth trajectory is likely pushed out to 2023 onwards. We maintain our BUY on the basis of this near-full recovery by the start of 2022, but with a high-risk caveat given risks of current lockdowns being extended in key areas delaying recovery.
Australia & New Zealand Market Movers
The Australian market was lower yesterday (ASX 200 index -0.6%), as a number of blue chip stocks went ex-dividend, coupled with general market weakness
BHP being one of the worst hit, was down 6.9% largely due to its current dividend (US$2.00 or ~A$2.73 per share) representing a huge chunk of its recently deflated share price. The price of iron ore also slipped overnight sending Rio Tinto down -0.7% as well.
CSL was also ex dividend sliding -1.8%, as well as Woolworths dipping -1.5%, Platinum Asset Management fell -3.5% and NIB Holdings was down -2.8%.
Altium was the best performer on the day climbing +4.3%, as well Polynovo (+3.8%) and Next DC (+2.7%) performing well in a generally weak session – with other tech names making modest gains following the lead from Wall Street.
Flight centre rose +0.3% after announcing it has expanded its corporate travel business to Japan through a joint venture.
The New Zealand market was up on Thursday (NZX 50 index, +0.3%). Synlait milk led the market up +3.1%, recovering from a sharp sell off recently sparked by A2 Milk, which was also up +1.8%.
Heartland Group finished the day strongly up another +2.2%, while Sky TV climbed another +1.6% as it told investors it anticipates revenue growth next year after years of steep decline.
3 Things Markets will be Watching this Week
- Locally Earnings season eases down. Major names including Fortescue, Altium, Harvey Norman, Healius, and Crown.
- ANZ Business Confidence survey in NZ will be released along with Q2 GDP in Australia.
- Globally, economic events this week include Nonfarm payrolls in the US along with the latest ISM activity data, Chinese PMI data and Eurozone CPI