New Zealand Market Movers
The New Zealand market (NZX 50 Index, -0.4%) fell on Tuesday without much market news to digest.
WasteCo Group (-15.8%) tanked to $0.08 on its first day on the NZX. Black Pearl Group (-39.2%) fell dramatically for the third day in a row, and now trades at less than half of its listing price.
Summerset (-0.1%) announced that director Anne Urlwin will retire from its board in February 2023 to join the board at Infratil (-1.0%).
Australia Market Movers
The Australian market (ASX 200 Index, -0.5%) declined late in the session on Tuesday after the Reserve Bank of Australia (RBA) raised its cash rate by 25-basis-points to 3.1%. Rocking the market further was comments by the bank’s governor Philip Lowe, noting that “The board expects to increase interest rates further over the period ahead…” in defiance of a dovish pivot that some market participants were expecting. The RBA next decision is due after its meeting on February 7, 2023.
Banking stocks fell on Tuesday, including Bank of Queensland (-0.4%) after announcing at its annual meeting that former Chief Executive George Frazis was dumped in November, after three years in the job, because he had lost the faith of the board.
Europe Market Movers
European markets (Stoxx 600 Index, -0.6%) declined Tuesday on muted trade, with Technology (-1.5%) and Financial (-1.4%) leading losses.
US Market Movers
US markets (S&P 500 Index -1.7%) tumbled on Tuesday, its fourth day in a row in the red. Banking (-0.9%) stocks closed in the middle of the pack. Morgan Stanley (-2.6%) led losses for most of the day after announcing that it had cut about 2% of its staff yesterday in preparation for bonus-season. Bank of America (-4.3%), Goldman Sachs (-2.4%), and Citi (-1.4%) also registered losses on the day.
Paramount (-7.0%) cratered after its CEO warned that fourth-quarter advertising revenue would likely come in lower than previously expected.
Stock in Focus: Fletcher Building (FBU.NZX)
Fletcher Building (+0.2%) rose yesterday even after the release of the Commerce Commision’s latest report concerning anti-competitive practices in the market for Gib board. In the report, The Commerce Commision noted nine recommendations to improve competition in the building supplies market, including making it easier to get competing products certified and available for sale. Commerce Minister David Clark said his ministry would respond to the recommendations in March.
We change our rating on Fletcher Building from a Buy to a Buy (High Risk), due to its attractive valuation as the market anticipates softness ahead for the construction sector. We have Fletcher building trading at a modest 11x forward earnings multiple and offering investors a healthy 6% (net) dividend yield over the medium-term. However, we view the risk of the construction sector being hit by a deep and prolonged slowdown as a real, but small possibility which is why we have a high-risk caveat.
What Markets will be Watching this Week (UTC +13)
Monday
EA ECB President Christine Lagarde Speech
Tuesday
US Factory Orders MoM OCT
AU RBA Interest Rate Decision
Wednesday
NZ Global Dairy Trade Price Index
AU GDP Growth Rate YoY
Thursday
AU RBA Bradley Jones Speech
Friday
NZ Electronic Retail Card Spending YoY NOV
Saturday
US Producer Price Index MoM NOV
