Global markets were mixed overnight, with the US market (S&P 500 index +1.1%) maintaining its winning streak after another batch of upbeat earnings and data suggesting the labour market may be stabilising – as jobless claims hit their lowest levels since November.
EBay jumped more than 10% after beating both top line revenue and bottom line profit expectations, coupled with a rosier-than-expected forecast for the first quarter. PayPal was up +7% to near all time highs after reporting its strongest quarter in history, tripling its profits and posting quarterly revenue above US$6 billion for the first time thanks to a surge in payment volumes. Apple rose 2.4% after hints that it is close to finalising a deal with Hyundai-Kia to produce driverless cars. Momentum remains strong across major technology stocks.
Fletcher Building (FBU:NZX)
Fletcher Building (FBU) shares have been performing well recently as the property market boom continues. 11,291 dwellings were consented in the 2020 fourth quarter, surpassing the previous quarterly record set in 1973 and taking annual consents to 39,420, up +4.8% year on year, which is all the more impressive given two months of nearly full lockdown constraining 2020's approvals.
We continue to remain BUY rated on FBU at current levels as the recovering NZ economy and elevated construction levels will continue to be supportive over the medium-term.
Australia & New Zealand Market Movers
The Australian market was lower yesterday (ASX 200 index -0.9%) with all sectors in the red after a three day rally.
The losses were led by a fall in major energy companies Origin Energy and AGL Energy – both reporting challenging conditions were to continue into next year. AGL shares dived -5.65% to 13 year lows after announcing it would incur $2.68 billion in charges for its first half, mostly due to falling wholesale power prices.
Nick Scali fell -0.9% despite flagging a strong June half after reporting a strong six months to December 2020, with profits up +90% however sales did miss market expectations. Retail strength has been surprising and has held up posit lock-downs across NZ and Australia.
The New Zealand market fell on Thursday (NZX 50 index -0.7%) as the prospect of rising interest rates locally start to cool equity markets, forcing investors to take profit and revalue assets which have be inflated by record low interest rates.
Shares in the Warehouse Group climbed 1.6% on the news it will pay a 5 cent per share special dividend following a stronger-than-expected trading performance, in particular over the critical Christmas period.
Auckland International Airport had more significant trading, dropping -2.6% (given its more sensitive to rising interest rates).
3 Things Markets will be Watching this Week
- It is the second biggest week of earnings with 113 S&P 500 companies reporting including: Amazon, Alphabet, Alibaba, PayPal, Pfizer, Merck, Exxon Mobil, Unilever, Royal Dutch, UPS, Siemens AG, Philip Morris, Glaxo, Gilead and BP PLC.
- The RBA makes a Cash rate decision on Tuesday
- US employment (Nonfarm payrolls) data is released at the end of the week.