Global markets were mostly lower overnight (S&P 500 index -0.5%) as optimism around the economic recovery by Federal Reserve Chair Jerome Powell and Treasury Secretary Janet Yellen was unable to halt a decline in technology shares for a second straight day.
The remarks by the top two US economic officials mirrored what they told Congress the day before, with Powell saying on Wednesday the most likely case is 2021 will be “a very, very strong year”.
While the three major indexes closed lower, looking under the hood, investors continue to sell last year’s big performers such as the technology shares that doubled the Nasdaq index from lows a year-ago, and bought the "cheaper" value-oriented stocks which are poised to do well in the post COVID recovery.
Church payments provider Pushpay (PPH) shares were higher for a second day in a row after founding members Peter and Christopher Huljich sold their holding to US-based investment firm Sixth Street Partners for $320m, at $1.85 per share. The price was 4% higher than Pushpay’s 30-day volume-weighted average price, at $1.78, and was a 2% premium to trading on Monday. Following the transaction, Sixth Street owns 17.8% of PPH.
This relieved a large overhang that was weighing on Pushpay's the share price, when it was announced late last year that the founding members were planning to sell down. Investors were likely expecting this large stake to be sold on the market, and it is a positive that one big backer has bought such a large holding.
We continue to be BUY rated as Pushpay is still reasonably priced technology stock with solid growth potential over the medium term.
Australia & New Zealand Market Movers
The Australian market (ASX 200 index +0.5%) was up yesterday buoyed by falling bond yields.
Healthcare was the top performing sector, with gains from Cochlear (+3.7%), CSL (+1.9%) and Ramsay Health Care (+1.4%). Commonwealth Bank added +1.9%, Wesfarmers rose +2%, Woolworths climbed +1.6%, and Goodman Group closed +3.2% higher.
Westpac was down -1% after the Reserve Bank of New Zealand said its subsidiary in New Zealand needed to take a close look at its risk governance practices after finding it had miscalculated a ratio that measures the ability to withstand stress for eight years, up until last year. crisis. Westpac announced it is considering whether to keep, spin off or sell its NZ business.
Energy stocks were among the market’s worst performers after the price of crude was hit hard amid rising concerns on the demand outlook, as Europe extended lockdown measures well into next month.
The New Zealand market fell on Wednesday (NZX 50 index -0.3%) as retirement stocks fell on the governments policy to pull back house prices.
Oceania Healthcare dropped -4.3% after it completed the first phase of its $100m capital raise, Arvida Group fell -2.4%, Ryman Healthcare declined -1.3% and Summerset Holdings was down -1.2%.
Spark NZ held an investor call saying it is confident of 5-10% annual growth in IT and managed services over the next three years despite the price pressure of public cloud competition – however it was not enough to excite investors as it fell -0.8%.
Sky Network Television was up 1.2% as it rolled out a high-end broadband service to some customers in an effort to provide more value and compete with cheaper streaming services.
3 Things Markets will be Watching this Week
- COVID related new-flow and vaccines remains a key driver for markets
- Highlights this week include 4th quarter economic growth (GDP) being released in the US.
- Locally, it will be a big week for the retail sector in NZ with Kathmandu, Hallenstein Glasson and Warehouse Group all reporting earnings.