New Zealand Market Movers
The New Zealand market (NZX 50 Index, -0.5%) fell in the lead up to US CPI data.
Napier Port (-1.4%) fell after reporting it had approved an on-market share buyback programme over 12 months, beginning next week, for up to 5% or 125,000 of its ordinary shares. Additionally, the port operator reported its second highest annual total cargo movement volume, although this represents a decline of -7.9% for the year ending September.
Air NZ (+2.8%) rose in response to the extremely positive guidance updated from its Australian Competitor Qantas (+8.7%), which is highlighted below.
Australia Market Movers
The Australian market (ASX 200 Index, -0.1%) traded sideways for another day.
Financials (+1.4%) and Consumer Discretionary (+0.1%) were the only sectors to register gains on Thursday. Regarding the former, Bank of Queensland’s (+0.3%) market update continued to uplift the sector for a second day, although larger gains were made in Westpac (+3.0%), NAB (+2.4%), ANZ (+2.1%), and Commonwealth (+1.9%), rather than the Bank of Queensland.
Nib Holdings (-12.0%) plunged when it returned from a trading halt. The cause was its completion of an AU$135 million bookbuild where it offered shares at $6.90 a share (previously a 8.0% discount).
Europe Market Movers
European markets (Stoxx 600 Index, +0.9%) closed higher despite the hotter-than-expected US CPI figure. The annual inflation rate in the US slowed to 8.2% in September from 8.3% August, the lowest in seven months, but above market forecasts of 8.1%. Travel and Leisure (+3.9%) was the best performing sector on the day.
The sterling (+2.0%) benefited from reports that there might be a policy U-turn from the Liz Truss led government. However, government officials have balked at the report. The euro (+0.8%), New Zealand dollar (+0.7%) and Australian dollar (+0.4%) all booked gains on Thursday.
US Market Movers
US markets (S&P 500 Index +2.6%) experienced an unusual rally on Thursday. After the hotter-than-expected CPI print, stocks fell to their lowest levels since 2020, before staging a remarkable comeback.
Energy (+4.1%) and Financial (+4.1%) stocks led the comeback. Among the sector leaders were Apple (+3.4%) who introduced a “high-yield” interest-bearing savings account for its Apple Card users, and Goldman Sachs (4.0%) who will administer the product. Other tech names such as Microsoft (+4.1%) and Nvidia (+4.0%) also experienced a surge in price.
Qantas Airways (QAN: ASX)
Qantas Airways (+8.7%) soared to its highest price in a year, closing at AU$5.62, after reporting that it now forecasts AU$1.2 billion to AU$1.3 billion in underlying profit before tax for the first half of its 2023 financial year. Previous forecasts were half this number. Thus, the airline will now return to profitability six months sooner than expected.
Concerns remain for the company regarding high fuel prices and interest rates impacting consumer confidence. However, the company believes that the extraordinary demand it is experiencing is indicative of consumers prioritising spending on travel above other categories. As such, Qantas’ expects to increase its international capacity from 61% to 77% of pre-COVID levels over the coming six months.
For investors looking for an airline exposure, we do prefer Qantas over Air NZ at the current juncture. While the recovery in demand is promising, fuel price headwinds will partially offset recovery over the near to medium term, and we don’t see fuel prices falling to their decade average under normal economic conditions.
What Markets will be Watching this Week (UTC +13)
Monday
US NFIB Small Business Optimism
Tuesday
AU Westpac Consumer Confidence Index OCT
AU NAB Business Confidence SEP
Wednesday
GB BoE Gov Bailey Speech
Thursday
US PPI MoM SEP
US FOMC Minutes
NZ Food Inflation YoY SEP
Friday
US Inflation Rate YoY SEP
NZ Business NZ PMI SEP