New Zealand Market Movers
The New Zealand market (NZX 50 Index, -0.7%) fell on Monday with investors concerned about the direction US and European equities will take this week.
Heavyweights Fisher and Paykel Healthcare (-2.6%) and Mainfreight (-1.2%) led the market down, with the former, as well as Pacific Edge (-3.2%) contributing to Heathcare stocks (-1.4%) declining the most on the day.
Losses in the NZ market were offset by gains made by energy generators Genesis Energy (+1.8%) and Mercury NZ (+0.9%).
Australia Market Movers
The Australian market (ASX 200 Index, -0.2%) fell marginally on Monday, even as increases in commodity prices helped spur a rally in Materials (+3.4%), including gains made by Fortescue Metals (+10.2%), BHP (+4.6%), and Rio Tinto (+3.3%).
Flight Centre (-3.8%) sold off after forecasting underlying earnings before interest, tax, depreciation and amortisation for the first six months of this financial year would be between $70 million and $90 million, falling short of earlier estimates above $100 million.
Telstra (3.5%) fell on two bits of news. The first is that Alex Badenoch, its executive for transformation, communications and people is leaving the company in December. The second is that the group’s venture capital arm, Telstra Ventures, has been caught up in the bankruptcy of cryptocurrency exchange FTX. Telstra Ventures has not disclosed how much it had invested in FTX.
Today’s trading will likely be affected by the release of the Reserve Bank of Australia’s meeting minutes (1.30 pm UTC+13), which will provide some insight into the decision-making process for its last interest rate hike, and possible future decisions.
Europe Market Movers
European markets (Stoxx 600 Index, +0.1%) eked out a marginal gain for a second day on Monday. European stocks were led higher by Technology (+1.2%) as Germany’s Infineon (+7.8%) raised its revenue growth targets and announced the construction of a €5 billion semiconductor factory in Dresden.
US Market Movers
US markets (S&P 500 Index -0.9%) fell on Monday, moving from positive territory spurred by Federal Reserve Vice Chair Lael Brainard speaking about the possibility that the bank could soon slow the pace of its interest rate increases.
Amazon (-2.3%) will apparently be the latest tech giant to announce large-scale layoffs, according to reports from both the Wall Street Journal and the New York Times. Amazon will reportedly lay off 10,000 employees, possibly starting this week.
In other news, US President Joe Biden concluded a three-hour meeting with Chinese President Xi Jinping in Indonesia on Monday. Beijing’s Ministry of Foreign Affairs has noted that the conversation was “in-depth, candid and constructive”. The hope is China-US relations normalise after years of rising tensions due to concerns related to Taiwan’s autonomy, support for Russia’s invasion of Ukraine, and tariffs on strategic goods such as semiconductors.
Stock In Focus: ELDERS (ELD.ASX)
Elders plunged 22.9% yesterday to $10.21 after reporting its annual results despite the result coming in strong on and on the top end of the guidance, the planned departure of its CEO Mark Alisson and uncertain outlook due to challenging weather conditions.
Elders revenue rose +35% and operating earnings (EBITDA) increased +39% and were able to declare a 56 cent per share final dividend, an increase of +33%.
While high demand for agriculture products will create favourable trading conditions in the first half, recent rainfall are creating some uncertainty in affected cropping regions and concern about reaching full harvest, and a soft outlook which have disappointed the market.
The sell-off may be overdone, more in relation to CEO stepping, down as even assuming weaker earnings for 2023, we anticipate Elders is trading quite cheaply at about ~11x PE and dividend yield of ~5%. We remain BUY rated on Elders at current levels, being immune to economic slowdown but investors should be wary of weather-related risk which appears to be partly priced in at least over the near-term.
What Markets will be Watching this Week (UTC +13)
Monday
Elders earnings
Tuesday
AU RBA Meeting Minutes
GB Unemployment Rate SEP
Infratil earnings
Wednesday
US Producer Price Index MoM OCT
GB Inflation Rate YoY OCT
Walmart earnings
Home Depot earnings
Thursday
US Retail Sales MoM OCT
AU Unemployment Rate OCT
Nvidia earnings
TJ Max earnings
Target earnings
Friday
Alibaba earnings
Applied Materials earnings
Ryman earnings
Saturday
JD.com earnings
