Global markets were up overnight, as US markets (S&P 500 index, +1.5%) rallied strongly as investors focus on strong earnings results, ahead of tonight’s US Inflation (CPI) data.
All sectors traded up, with tech shares leading gains as investor confidence around "buying the dip" grew. US tech stocks have made back about 1/2 of their losses year to date now, as a whole. The positive mood spread across the market as investors bid on stocks that benefit from stronger economy and gradual easing of covid cases. Currently 76% of 317 S&P 500 index companies that have reported have beat earnings estimates.
Meta rose +5.4%, after being heavily sold off posit its result, while many lockdown beneficiaries also traded strongly – Shopify (+5.3%), Etsy (+3.8%), DocuSign (+5.2%), and Zoom Video (4.8%). Chipotle soared +10.2% and KFC parent Yum Brands jumped (+2.2%) after both fast-food chains posted better than expect earnings.
European Markets (Stoxx 600 index +1.7%) were up amidst strong earnings, while a French Central banker stated markets may have getting ahead of themselves with pricing aggressive rate hikes.
Australia and New Zealand Banking Group (ANZ:ASX / ANZ:NZX)
ANZ shares were down when it announced its first quarter result which didn’t fare as well as Westpac’s or CBA’s.
Investors were spooked by 8 basis point decrease in its net interest margin (NIM) down to 1.57% and poor performance for its Markets business in October. While near-term outlook appears challenging it should ease over the medium-term, as interest rates are set to rise.
We remain HOLD rated on ANZ given weakness of its markets facing business. We preferred Westpac given they are more attractively priced and forecasted to pay out a higher dividend yield – especially after their cost out programme.
Australia & New Zealand Market Movers
The Australian market was up yesterday (ASX200 index +1.2%), as Tech and banking stocks led gains.
CBA rose +5.6% after its first half cash profit smashed expectations despite margin pressure and announced $2 billion of on-market share buyback and lifted its interim dividend, the news saw its major lender peers also trade higher.
Tech was the best performing sector as most traded higher, following Walls street’s lead as investor confidence grows.
Temple & Webster soared +9.7% after it’s reported a fresh sales jump in January as customers avoided brick and mortar outlets. Computershare climbed +11.2% after its half year profits climbed and it increased its dividend.
The New Zealand market (NZX 50 index, +0.9%) was up on Wednesday, as beaten up stocks played catch up.
DGL Group surged +11.9% after the newly listed chemical logistics business hiked its earnings guidance.
Infratil rose +1.7% after its European Datacentre business Kao Data settled on two prime location data centres to deliver multi-site services for its clients.
Local tech stocks were generally strong except for Pushpay which slipped another -2.7% after revealing FMA charges relating to insider trading back in 2018 – which should not have any negative implications on Pushpay's business directly.
3 Things Markets will be Watching this Week
- US Inflation (CPI) data will be in focus given its importance in regards to its importance for the interest rate track.
- US earnings from the likes of Pfizer, Toyota, Coca-Cola, Walt Disney, PepsiCo, L’Oreal, Astra Zeneca, Unilever and Uber.
- Locally, Australian & NZ earnings season commences, with results of note from Suncorp, CBA, AMP and Downer EDI.