Jobs Numbers Surprise | Kathmandu Jumps

5 July 2020

Global markets were higher overnight (S&P 500 index +0.4%) with the Nasdaq technology index hitting an all-time high as the run of positive economic data continues.

A record-setting increase in monthly US jobs pointed to a rebound in business activity following the easing of coronavirus-led lockdowns. Prospects for an economic rebound after better-than-estimated jobs data (+4.8m jobs added in June) come amid concerns over a second wave of coronavirus cases. Equities briefly pared gains on news that Florida’s cases and hospitalizations jumped the most ever, while deaths rose the most in a month. 
Trade tensions also remain on the radar as White House Economic Adviser Larry Kudlow said “we are very unhappy with China” and “there are going to be export restrictions”.

 

Kathmandu (KMD:NZX / KMD:ASX)

Shares in Kathmandu jumped +11% yesterday after the outdoor wear retailer outlined a strong recovery in sales since reopening stores in May after coronavirus restrictions were eased in Australia and New Zealand. 

KMD expects operating earnings to drop but stay above $70 million, as over the last 6 weeks of trade (18-May to 28-June) Rip Curl same store sales (excluding the ones which remain closed) increased by 21% and Kathmandu same store sales increased 12.5%. 
The big upgrade to 2020 earnings was in line with updated guidance and driven by both higher sales and higher gross margin enabled by lower levels of discounting activity required.   

Importantly, management noted it expects government support packages and pent-up demand are underpinning current sales, and a heightened level of uncertainty is likely to persist in the medium term. 
We currently have a HOLD rating on KMD.

 

   
Australia & New Zealand Market Movers

The Australian market rallied yesterday (ASX 200 +1.7%) as the local technology index hit a fresh high, driven by a rise in Afterpay shares. 
All sectors were higher, with blue chips and the banks all making solid gains. The local coal sector even rose despite reports that Japan was planning to retire 90 per cent of its older coal-fired power plants in the next decade.

The New Zealand market was higher on Thursday (NZX 50 Index +1.3%) on low volumes, with Pushpay (+9%) and Kathmandu leading gains.
Cinema software firm Vista Group International fell as delayed releases of blockbuster movies are halting the reopening of movie theatres around the world. Tourism Holdings posted the day’s biggest decline, while Metlifecare shares declined – the New Zealand Shareholders' Association said it will reluctantly vote in favour of Metlifecare's litigation aimed at forcing Sweden's EQT to proceed with its $1.5 billion takeover offer, despite expecting court costs to be high and the process slow. There is reportedly mounting pressure from shareholders for Metlifecare to re-engage negotiations with EQT.

 

3 Things Markets Will be Watching this Week

  1. ​​​​Covid-19 newsflow around a second wave and re-opening of economies remains front of mind.
  2. ​​Key US data including monthly employment numbers are released at the end of the week
  3. Minutes from the last US Federal Reserve meeting ​will also be released this week. 

Have a Great Day,
 

Team

Global markets were higher overnight (S&P 500 index +0.4%) with the Nasdaq technology index hitting an all-time high as the run of positive economic data continues.

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