Global markets were mixed overnight, with the US market (S&P 500 index +0.06%) edging higher, on mixed results following a sharp sell-off on Wednesday after very high inflation data.
US consumer price inflation rose faster than expected for the month of October, hitting a 31-year high of +6.2% annual increase as CPI (inflation) leapt +0.9% month on month – while core (which excludes energy & food) CPI rose +0.6% month on month. This spurred a rise in US Treasury bond yields with the 10-year currently up and trading at 1.59%.
Technology stocks were mainly stronger rebounding from Wednesday’s sell-off, while the Material sector was the best performing and hit a fresh all-time high. While stocks more sensitive to the high inflation read were weaker, offsetting gains.
In stock specific news, Disney shares fell -7% after the media giant missed on the top and bottom lines (revenue & profit) of its quarterly result and Disney+ subscribers also came in short of estimates.
European Markets (Stoxx 600 index, +0.3%) rallied, helped by a surge in mining stocks.
Pushpay (PPH:NZX / PPH:ASX)
Shares in church payments software business PPH have slumped, after delivering a disappointing result for the first half of the 2022 financial year.
The weak set of numbers larger due to modest revenue growth of only +9% urging the company to provide an extremely rare earnings downgrade for the 2022 full year. Operating earnings for the half came in flat form last year at $26.9m largely due to the weak revenue growth offset set increased operating expenses and costs associated with the Resi Media acquisition.
Going forward, Pushpay’s growth may slow but is still promising with forecast increases in the adoption of digital technologies for the church community, cross sell opportunities with new products, and new target markets -albeit requiring more sales and marketing investment to reach more medium-tier churches.
We maintain our BUY rating on Pushpay as the underlying business continues to present an attractive investment opportunity into the giving space especially at current levels – adjusting for slowdown in growth from new customer adds. PPH is a cash generative technology stock and investor expectations have now been reset significantly lower.
Australia & New Zealand Market Movers
The Australian market was down yesterday (ASX 200 index -0.6%), following a weak lead from Wall street after a high inflation data suggesting the Fed may raise rates sooner rather than later.
Employment data showed Australia shed 46,000 jobs, well off expectations of adding 50,000 jobs adding to weakness in the market.
This saw most sectors fall except for materials, Chalice Mining extending its gains rising another +9.6%, while Fortescue rose +8.2% as the market remained bullish on its plans to invest into renewable energy sources.
Tech stocks were sold hard, Xero falling -6.2% after it swung back to a loss for the first half of the 2022 financial year, despite revenue climbing +more than 20%. Nearmap led losses slumping -12.3% after its guidance annual contract value (ACV) for 2022 was expected to be between $150m and $160m well off expectations.
Ramsay Healthcare fell -4% after reporting its quarterly profit came in at $58.1m, down -39.5% from last year.
The New Zealand market was flat on Thursday (NZX 50 index, +0.03%) as rising local rates weighed down on most of the market.
Most yield and property stocks were generally weaker – Contact Energy (-0.6%), Spark (-0.7%), Precinct Property (-0.9%) and Kiwi Property (-0.9%). Pacific Edge leading losses down -2.1% followed by Invesotre Property down -1.9%.
Stocks sensitive to inflation also saw declines, the Warehouse Group dropping 1.7% and My Food Bag hitting new lows falling -1.7%
Offsetting losses was Mainfreight out rising +2.8% after reporting solid result where its profit rose +78% to $182m thanks to strong demand across all key areas. Goodman Property Trust rose +1.2% bucking the local interest rate hikes after reporting a statutory profit of $570m and operating earnings before tax of $60.2m which rose +7.5%.
3 Things Markets will be Watching this Week
- Key events this week include CPI (inflation) data from the US and China.
- Employment data from Australia.
- Local earnings from James Hardie, NAB, Pushpay, Xero, Orica, Infratil, Goodman Property, Pusdpay and Mainfreight and AGM’s are scheduled for Contact Energy, Fortescue, Ansell, Coles Group, Lendlease, Charter Hall, Computershare and REA Group while Investor Days will be hosted by Stockland and Kathmandu.