Global markets were higher overnight (S&P 500 Index +0.5%) as investors hoped for more stimulus from Washington, with Senate Republicans reportedly preparing to vote on a bill to help small businesses hammered by the COVID-19 pandemic. US fiscal stimulus headlines dominate the news board, with no agreement for a relief package as clear differences between both sides still remain.
In stock news, technology shares underperformed after the US Justice Department said it was poised to sue Google for allegedly abusing its power. Procter & Gamble shares rose on the best organic sales growth since 2005.
PGG Wrightson (PGW:NZX)
PGG Wrightson (PGW) has signalled a positive start to 2021, supported by a robust horticulture backdrop, with the Retail division experiencing good demand over the spring period and Livestock trading volumes bouncing back post COVID-related closures. However, it is early in the financial year with key seasonal periods ahead of it and elevated levels of global trade uncertainty.
While the update was solid with the reinstatement of a dividend a good signal, the operating environment remains uncertain and PGW’s valuation is far from cheap.
We currently have a HOLD rating on PGW and will release a full update in our weekly report.
Australia & New Zealand Market Movers
The Australian market (ASX 200 Index -0.7%) finished lower on Tuesday and the Aussie dollar edged down towards 70 US cents as the Reserve Bank gave further suggestions of a rate cut next month.
The big move on the ASX was Afterpay as its deal with Westpac dominated market attention in local trade. The financial disruptor and bank agreed to terms that will have Afterpay offer its more than 3 million Australian customers transaction and savings account services via Westpac’s new digital platform. The deal helped Afterpay shares smash through $100 for the first time to close at $101.92, up 4.5%.
BHP dropped -1.6% after posting a mixed September-quarter production report, even as it maintained 2021 guidance for its key assets with a 7% rise in iron ore output.
Finally, CSL highlighted that they continue to expect to spend ~10-11% of revenue on Research & Development annually, something which is key for CSL to maintain an competitive edge.
The New Zealand market was higher yesterday (NZX 50 Index +0.6%) as RBNZ Governor Orr continued with the dovish talk, talking up the merits of negative interest rates, saying they “can be highly effective and highly efficient”. The RBNZ governor also stated the central bank will act on LVR ratio limits if it sees house prices in NZ being driven by very high leverage loans and by investors rather than households. Back in May the RBNZ removed the limits on high loan to value ratio (LVR) lending that had been in place since 2013, saying these would be lifted for at least 12 months.
3 Things Markets Will be Watching this Week
- The week ahead is dominated by corporate earnings in the US with key names reporting including Netflix, Tesla, Procter & Gamble, and Coca-Cola.
- In the US we will also see the release of 3rd quarter GDP figures and the last US presidential debate.
- Locally, CSL will host an investor briefing while Mirvac and AMP will provide quarterly updates and a number of companies are hosting AGM’s including Origin Energy, Crown, Magellan Financial, Webjet, and Qantas.