Global markets were up overnight Friday, as the US market edged higher (S&P 500 Index +0.7%) and the S&P 500 index is now just 3% shy of its record highs.
US manufacturing data overnight touched its highest levels since March 2019 driven by new orders and production. This continues the run of better than expected economic data and US employment figures at the end of week will be watched closely.
The tech sector again outpaced the rest of the market as Apple climbed another 2.5%, expanding its rally following stunning quarterly results and announcing a four-for-one stock split as the tech giant is about $140 billion short of hitting $2 trillion in market capitalisation. Microsoft jumped +5.6% after it said it would push ahead with talks to buy the US operations of Chinese-owned TikTok (a social media app). Google announced it was buying a 7% share in a home security firm ADT. During earnings so far CEO's especially in the tech space appear to be more confident about the future, despite covid-19 showing no signs of slowing down anytime soon.
Scales Corp (SCL:NZX)
Scales Corp shares dropped 6% yesterday after announcing underlying net profit would be at the bottom end of its $30m to $36m guidance range, compared to $36.4m for the 2019 financial year.
Despite remaining at full operations its business divisions were influenced by the impact of covid-19 on international markets due to demand disruptions and stronger China crop impacting pricing,. Fortunately this was offsetting a strength in the food ingredients business helped by strong demand for global pet food globally.
We continue to remain upbeat on Scales medium view and remain comfortable with our BUY rating and see this as a "buy the dip" opportunity.
Australia & New Zealand Market Movers
After a tough start to the trading day the Australian market managed to end the day flat yesterday, after heavier lockdown provisions were announced for the state of Victoria over the weekend. This put Australia's near term economic recovery under more pressure with heavy losses led by the major banks, however the market turned with major miners and healthcare stocks offsetting the financial sector.
The already beaten down travel sector was also hard hit with sharp declines as well as shopping centre owner Scentre Group which also suffered with its shares falling 5.6%, with seven of the group's 37 Australian centres located in Victoria. Coles and Woolworths also traded higher Victoria's lockdown measures allow supermarkets to remain open while a number of other businesses will be forced to close.
The New Zealand market fell (NZX 50 Index -0.5%). Travel related stocks were also hard hit with hopes of a trans tasman bubble commencing this year diminishing. Pushpay Holdings dropped 4.9% on no news, as investors took profit on low volume on one of NZ's best performing stocks this year, with A2 milk also easing back slightly.
Fisher & Paykel Healthcare was a touch higher on volatile day, as a direct benefactor of rising covid-19 cases, and a few domestic and more defensive safe havens such as Spark, Trustpower and Goodman Property trust were part of select few to end the day in the green.
3 Things Markets Will be Watching this Week
- COVID-19 related news-flow remains key, with second wave and lockdown headlines, while US Congress debate what an extension of stimulus will look like.
- Monthly employment figures are released in the US (Nonfarm payrolls) and it will be another big week of corporate earnings.
- Closer to home, the Reserve Bank of Australia makes an interest rate decision.