Markets Buoyed by Vaccine News | Elders Jumps

20 May 2020

Global markets were higher overnight, as the US market (S&P 500 +3.1%) surged higher to close at a 10-week high on a number of positive developments.
The major one being drug maker Moderna Inc announcing  its experimental COVID-19 vaccine showed promising results in a small early-stage trial, coupled with Federal Reserve Chairman Jerome Powell pledging more stimulus relief is available to lift the economy. 

This saw stocks that have been particularly battered by government lock down measures surge, with travel related stocks being the best performers after Delta Air Lines announced it would resume flying several major routes in June.  

Trade war tensions have also eased, after Chinese President Xi Jinping announced China will embrace an independent enquiry into the cause of covid-19 and has pledged US$2 billion to support the world's response to the global pandemic. 


Elders Limited (ELD:ASX)

Shares in diversified agriculture supplier Elders (ELD) soared yesterday up +9.9%, and hit a new 10-year higher after delivering deliver a better than expected result for the first half of the 2020 financial year.

The result was helped by recent winter crop confidence boosted by favourable weather conditions (after the Australia/..n Bush fire) and a rise in agriculture related commodity prices.

After a challenging 2019, Elder's shares have rebounded since the dry drought conditions and shares have proved to be resilient through the bush fire and covid-19 pandemic as its customers in the agriculture space are deemed essential services and continued to operate business as usual. 

We currently have a BUY rating on ELD.


Australia & New Zealand Market Movers

The Australian market (ASX 200 Index +1%) was up on Monday, as stronger commodity prices saw iron ore and gold miners drive the market higher offset falls amongst the banks on the back on weak economic data creating a bleak outlook for the lenders.

Reduction of containment measures both locally and around the world, with cafes restaurants and pubs in Victoria able to reopen from 1 June with 20 patrons lifted markets, while NSW opening up tighter restrictions of only 10 patrons per venue with limits likely to increase over time. Village roadshow shares surged +20% after confirming it was in discussions with private equity firm BGH Capital, after social distancing measures dealt a significant blow to the theme park and cinema operator. 

The New Zealand market was a touch higher yesterday  (NZX 50 +0.3%) buoyed by a weaker NZD benefitting kiwi exporters and a stronger close on Friday for US markets. This was offset by sell-off by many weaker companies which rose strongly last week including Z Energy after releasing weak data for demand for fuel under less strict level 3 lock down.   

Auckland Airport announced passenger numbers for the month of April were down -97.5%, largely due to the lock down. Air NZ announced it will cut 300  engineering and maintenance jobs now on the cut in an attempt to downsize the company amidst weaker demand outlook, for the start of level 2 Air NZ will operate at roughly ~20% of precovid-19 capacity.


3 Things Markets Will be Watching this Week

  1. ​​Covid-19 and lock-down news-flow remains key in terms of market moves.
  2. China-US tensions. The National People's Congress meeting in China will commence on Friday. The meeting is the Chinese Government's platform to outline its economic growth targets and management plan for the year ahead.
  3. Locally, earnings are due from James Hardie, Aristocrat, Property for Industry and Argosy Property. 


Have a Great Day,


Global markets were higher overnight, as the US market (S&P 500 +3.1%) surged higher to close at a 10-week high on a number of positive developments.

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