RBA Stays Dovish | Spark’s Dividend

4 March 2021

Global markets were mixed overnight, retracing after Monday's strong bounce US markets (S&P 500 index -0.8%).

Technology dipped and continued to underperform with an ongoing rotation by investors out of stocks that outperformed due to the coronavirus pandemic and into others viewed as likely to do well as the economy recovers.
“We have more optimism about reopening parts of the economy. We are seeing people rotate out of tech stocks and into the reopening stocks, like industrials and financials,” Tom Hainlin, global investment strategist at U.S. Bank Wealth Management.

Closer to home, the RBA’s policy update yesterday turned out to be fairly routine, with rates guidance unchanged and the Bank reiterating that conditions for a hike were not likely until 2024 at the earliest. Most interesting, there was no suggestion that the QE programme would be larger than the $100bn indicated at this stage, after the step up in bond purchases on Monday to help contain long-term yields. 
There is a growing divergence between what central banks like the RBA & RBNZ are saying around interest rate moves, and what the market is starting to expect.

 

Spark (SPK:NZX / SPK:ASX)

Spark (SPK) shares have been edging higher since releasing its 2021 first half result. The Telco reported revenue of $1,796m which was down -1.5% due to the loss of higher margin mobile roaming revenue from sustained covid-19 boarder closures. However operating earnings (EBITDAI) rose +0.4% to $502m, as disciplined cost management saw operating expenses offset revenue decline.

More importantly, management have guided 2021 full year dividend of 25 cents per share, an upgrade from previous guidance of 23-25 cents per share.  

We continue to remain BUY on Spark as it offers an attractive 5.3% cash dividend yield . 

 

   
Australia & New Zealand Market Movers

The Australian market fell (ASX200 Index +0.4%) yesterday, after initially starting the day up as domestic bond yields rose once more following the RBA's meeting. The central bank held steady on changing its monetary policy settings but signaled it was prepared to do more if necessary.

There was strong selling across the board, particularly in the miners and the tech sector, with losses offset by gains in the major banks. Building material stocks were also on the rise as building approvals were +38% higher than they were last year.

The New Zealand market was higher on Tuesday (NZX 50 index +0.4%), as local bond yields held flat after the sharp rise over February.

A2 Milk led the gains up +5.5%, recovering from last week's heavy sell off. Likewise Meridian Energy was up +4.3% partially recovering from its major decline for most of the year.

Travel stocks were mixed, with Tourism Holdings climbing +4.1%, while Auckland Airport retreated, down -2.9%.

 

3 Things Markets will be Watching this Week

  1. Unfortunately, COVID related news-flow continues to dominate headlines, both in terms of lock-downs and vaccine news. 
  2. The Reserve Bank of Australia makes its latest  cash rate call on Tuesday. 
  3. Later in the week there is a raft of economic data, including closely watched US unemployment figures (nonfarm payrolls).

Team

Closer to home, the RBA’s policy update yesterday turned out to be fairly routine, with rates guidance unchanged and the Bank reiterating that conditions for a hike were not likely until 2024 at the earliest.

Do You Want Daily Market Insights?

If you’re interested in staying up-to-date with the latest news and analysis on stocks, be sure to sign up to BlackBull Research.

1 Month Free Trial

Access our expert stock market research Free of charge with no obligation

Free 1 Month Free Trial

Unlock this article & access our expert stock market research

ASX, NZX & USD Stock Buy, Hold, Sell recommendations. Model Portfolios. Daily news and more

[pmpro_checkout]