Record Rally Continues | Heartland Group

15 June 2021

Global stocks creeped higher overnight (S&P 500 index +0.2%) despite being weaker for most of the trading session with Tech & Telco’s the outperformers while Materials & Financials lagged. The Nasdaq jumped +0.7%, with US indices closing at new record highs, as investors rotated back into growth-orientated stocks ahead of Key Federal Reserve meeting.

The Fed's two-day policy meeting will likely dominate investor behaviour this week, with expectations for no change to rates or tapering monetary policy over the near-term, but the Fed could move up its forecast for a rate hike ahead of initial guidance –  after saying in its last quarterly update that it would keep its benchmark rate near zero through 2023.

The tech sector was the best performer in the session as big names rose strongly, with Apple, Netflix, Salesforce and Adobe up over +2%, while Amazon, Microsoft, Facebook and Nvidia all recorded modest gains. On the flip side, financials were weaker. JP Morgan was down -2.3% after announcing their upcoming result will be slightly lower than expected.  

European stocks were up, with the Stoxx 600 index up +0.2% lifted by energy stocks and the price of oil rallied on strong demand which was offset by some weak company related news.  

Heartland Group (HGH:NZX)

Heartland bank shares were up +6.1% yesterday following a broker upgrade and profit upgrade announcement last week – as the strong NZ and Australian economy look set to support the bank's growth. For the three months to 31 March 2021 Heartland Group saw profit of $21m, with growth across Motor vehicle loans, and Reverse mortgages on both sides of the Tasman, while maintaining a healthy net interest margin.

While the risks facing Heartland Group have been reduced due to a more robust economic outlook, we continue to remain HOLD rated due to valuation basis and prefer Westpac and ANZ due to their lower risk profile and more attractive valuation at the current juncture. 

Australia & New Zealand Market Movers

The Australian market was closed yesterday for their Queens Birthday

In other news, overnight Royal Philips NV has recalled ~3.5m sleep apnea and ventilator machines over concerns a type of foam used in the devices could degrade and release harmful, possibly cancer-causing, particles. About 80% are machines for aiding people with sleep apnea while the rest are life-supporting mechanical ventilators. ResMed was up 4.6% in US trading with Fisher and Paykel Healthcare also likely to benefit today.

The New Zealand market (NZX 50 index +0.1%) was a touch higher yesterday, on a quiet day of trade as Australian market was closed.
Skellerup rose +1.1%, and Heartland Bank was up +6.1% the best performer on the day after both receiving favourable broker upgrades.   
Synliat (+3.9%) and A2 Milk (+2.6%) recovered some ground trending upwards in recent days since plummeting to multi-year lows.

Z Energy and Fisher and Paykel Healthcare were the biggest losers both down -3.1% and -2.6%, the former likely under pressure on Labour's proposed tax on new petrol/diesel vehicles.

Global stocks creeped higher overnight (S&P 500 index +0.2%) despite being weaker for most of the trading session with Tech & Telco’s the outperformers while Materials & Financials lagged

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