Global markets were lower overnight (S&P 500 index -0.8%) as investors took a more cautious tone heading into the upcoming corporate earnings season and a key inflation report later this week.
Investors are going to pay close attention to earnings season, expecting management guidance from companies to drive valuations. The major US Banks are among the first to kick off reporting season, with Goldman Sachs, JPMorgan and Wells Fargo due on Wednesday – both the financials index and consumer discretionary sector both hit record highs, on confidence both areas are set to perform well as the U.S. economy reopens. Optimism is growing now that these banks are going to return to normal business, with buybacks and dividends, and because the outlook for higher Treasury yields improves bank interest margins.
Summerset Group Holdings (SUM:NZX)
Summerset (SUM) shares were up +0.9% yesterday after releasing solid sales numbers for the first quarter of the 2021 calendar year.
Summerset reported 275 sales for the quarter, almost double the same corresponding period last year which was partly affected by covid-19 lock down, comparing strongly to the previous quarter (2020 fourth Quarter) of 296.
Rolling 12-month figures showed new sales were up +47% from the same corresponding period last year and resales were at record levels up +33% from the same corresponding period last year – with wait list and pre-sales at strong levels with demand remaining strong.
We continue to remain BUY rated on Summerset being more attractively priced compared to its peer Ryman, and as sector demand for retirement villages continues to be solid.
Australia & New Zealand Market Movers
The Australian share market slipped lower yesterday (ASX 200 index -0.3%) as shares retreated from their recent run, dragged down by the major miners and real estate companies. Miners including Newcrest (-2.5%), BHP (-1.1%) and Fortescue (-1.6%) weighed on the index amid weakness in iron ore.
Travel companies were also weaker as the pace of Australia's vaccine rollout took a step back, with the government abandoning the goal for every Australian to get their first vaccine dose by October. As a result, Qantas (-2.4%), Flight Centre (-1.2%) were weaker as the set back points to a delay in commencing international travel.
The New Zealand market was lower on Monday (NZX 50 index -0.4%) with a couple of CEO's handing in their resignation.
Pacific Edge led the decline, falling -4.2%, after David Darling announced he would step down as chief executive in April next year with the fall more attributed to profit taking after their more than +20% gain on Friday.
Synlait Milk dropped -2% after the sudden and unexplained departure of its chief executive, Leon Clement which would have likely to be linked to the dairy processors -76% slump in net profit.
Renewable electricity generators continued to rebound just one week before the rebalancing of a critical clean energy index. Meridian Energy climbed +3.1%, Mercury Energy was up +3%, and Contact up +1.4%.
3 Things Markets will be Watching this Week
- Reporting season in the US also kicks into gear with 24 S&P 500 companies due to report including JPMorgan, BofA, Citi, Morgan Stanley and Goldman.
- Locally, the latest employment data in Australia is due while the RBNZ meets on Wednesday.
- Bank of Queensland will release 1st half earnings on Thursday with quarterly updates due from Transurban, Mineral Resources and Auckland Airport. AGM’s are scheduled for Santos, Woodside, NZME and Seeka.
