Global markets rebounded overnight (S&P 500 index +1.4%) as bond yields started to ease and investors regained an appetite for technology stocks.
The heavyweight technology sector jumped strongly (Nasdaq +3.7%) post a tough few weeks. Tesla jumped the most in almost a year (+19.6%), while Amazon.com (+3.8%) and Microsoft (+2.8%) posted the biggest single-day gains in five weeks. All other major sectors were also in the green, except energy.
The technology sector stars suffered sharp losses in recent weeks as rising yields raised concerns over their high valuations. In a sharp reversal overnight, stay-at-home winners surged after recently being left for dead as vaccinations pick up and Democrats move to inject $1.9 trillion into the economy. Whether this is the start of a trend or one-day move remains to be seen.
Auckland International Airport (AIA:NZX)
Auckland International Airport (AIA) shares have been fairly volatile in response to covid-19 / vaccine related news as well as movements in bond yields in recent weeks.
In terms of recent stock news, Auckland airport reported its first ever loss and threw some cold water on any expectations of an imminent recovery in travel. Chief executive Adrian Littlewood said the timing of any recovery remains uncertain given material quarantine-free, two-way Tasman travel during the remainder of the 2021 financial year remains to be seen. However, given vaccine news-flow of late we think there is still the possibility of a near term Trans-Tasman bubble, and this could be significant for AIA.
We continue to remain BUY rated on the company, due to its ability to benefit from a return to near-normal international travel, but with a high-risk caveat due to its current valuation and lack of certainty when exactly the Trans-Tasman bubble will commence.
Australia & New Zealand Market Movers
The Australian market was higher on again on Tuesday (ASX 200 index +0.5%) despite tech sector continuing to take a beating.
The major banks continued to lead market gains, with Macquarie leading the pack up +2.4%, followed by modest rising from a number of giant blue chips – CSL rose +1.7%, Wesfarmers up +1.2%. Travel and leisure stocks were also performing well as vaccine roll-out continues.
Technology stocks once again fell with the sector hardest hit again amidst rally of global bond yields.
The New Zealand market rose yesterday (NZX 50 index +0.5%) supported by the pending introduction of massive US fiscal stimulus and the hope that the speedy development and distribution of covid-19 vaccines.
The Gentailers continue their volatile trading as they adjust to bond yields, Meridian Energy climbed +4.1%, Genesis Energy rose +3.4%, and Contact Energy was up +2.5%.
While yields eased slightly today, property stocks saw significant falls, Stride Property dropped -4.6%, Argosy Property declined -3.4% and all others approximately 2% weaker.
3 Things Markets will be Watching this Week
- Unfortunately, COVID related news-flow continues to dominate headlines, both in terms of lock-down and vaccine news – with the US now expecting vaccinations to be rolled out across the country by the end of May.
- The European Central Bank makes an interest rate call on Thursday.
- In terms of economic data, we will see the latest US inflation data, and the latest business confidence readings in Australia and NZ.