This will be the final daily email of the year returning back mid-January and would like to take this time to wish everyone a Merry Christmas and happy new year.
It has been a volatile year, headlined by out-of-control inflation, aggressive rate hikes by central banks tightening loose monetary policy from the onset of the pandemic to cool demand, while the Ukraine invasion creating added fuel crisis. We believe next year would be another year dominated by more volatility as we see the full effects of the rate hikes play out to cool economic activity with stability in the market still some time away and think a soft landing (which some may still hope for) is now out of the picture. For that reason, we are on a more cautious and defensive position and would wait to see how the next 3-9 months play out before making any major positions.
New Zealand Market Movers
The New Zealand market (NZX 50 Index, 0.0%) closed flat on Friday last week.
The big news of the day was Fletcher Buildings (-2.6%) announcing it added another $150 million provision to the cost of building SkyCity’s (0.0%) NZ International Convention Centre and hotel in Auckland Central.
Sky Network Television (+0.5%) advanced after announcing it had entered a multi-year agreement to televise Formula 1. Sky Television may have also been boosted by the news from Spark (+2.0%) that it will exit sports broadcasting and TVNZ would become the new home for Spark Sport.
A2 Milk (-4.1%) slumped on Friday even as ASX-listed Abbott Laboratories announced it is withdrawing from the Chinese infant formula market, leaving their 3% market share open for the taking.
Pacific Edge (+7.4%) surged after announcing that the US Federal Drug Administration approved its first gene-therapy for the treatment of certain high-risk, unresponsive bladder cancers.
Australia Market Movers
The Australian market (ASX 200 Index, -0.8%) closed lower on Friday, with Tech (-2.0%) stocks the hardest hit.
Rail operator Aurizon (+4.0) advanced after offloading its East Coast Rail Coal haulage business for $425 million in cash. Mineral Resources (-1.0%) retreated after launching a $403 million bid to acquire Norwest Energy (+31.1%).
Europe Market Movers
European markets (Stoxx 600 Index, -1.2%) closed at a five-week low after two days of selling-off. All sectors were in the red except banking (+0.7%), with telecoms (-2.4%) leading declines.
US Market Movers
US markets (S&P 500 Index -1.1%) continued their decline on Friday, as fears grow that a hard landing for the US economy is inevitable. The Santa-rally has not yet eventuated and this month December losses stand at -5.6%.
The sell-off was broad-based on Friday with all sectors in the red, led by losses in Real Estate (-3.0%) and Consumer Discretionary (-1.7%).
Stock in Focus: Square Space (SQSP.NYSE)
We initiate coverage of Squarespace with a sell rating. The company is engaged in providing an all-in-one website solution ranging from design to hosting. The company’s main competitors are WordPress and Wix. While the company provides a good product — it is easy to use and looks very professional, we think the company appears to be struggling to scale its product well. In short, it has a limited audience.
What Markets will be Watching this Week (UTC +13)
Monday
NZ Westpac Consumer Confidence DEC
Tuesday
NZ Balance of Trade NOV
NZ ANZ Business Confidence DEC
AU RBA Minutes of Dec Policy Meeting
Wednesday
EU Consumer Confidence DEC
NZ ANZ Consumer Confidence DEC
Thursday
GB GDP Growth Rate YoY Final Q3
Friday
US Chicago Fed National Activity Index NOV
Saturday
US Durable Goods Orders MoM NOV