Global markets mostly drifted lower overnight (S&P 500 Index -0.2%) although the Nasdaq US Technology index higher – in a reversal of this month's trend, weakness in the energy, financial and industrial sectors pulled the major indices lower while gains in the FAANG's helped keep the Nasdaq in the green.
Investors mulled a larger than normal batch of US economic data ahead of the Thanksgiving holiday in the US. Weekly jobless claims data ticked higher for a second week and consumer confidence slipped, serving a reminder of the challenges that remain in a COVID-19 environment, despite vaccine optimism. The housing market remained in rude health with November new home sales above expectations.
In other news, President Xi congratulated Biden on his election victory and said China wants to advance a “healthy and stable” relationship and uphold principles of “no conflict” and “no confrontation”. It remains to be seen if the US-China relationship will improve under Biden.
Fisher & Paykel Healthcare (FPH:NZX / FPH:ASX)
The largest listed NZX company, FPH, yesterday reported an impressive and record first-half result and lifting its full-year guidance to $1.7 billion in annual revenue, but a slightly softer than expected outlook weighed on the stock.
Fisher & Paykel Healthcare said its interim net profit surged 86% while revenue jumped 5% as there is no doubt F&P has been an extreme beneficiary of COVID. Questions remain as to whether this will prove to be a one-off boost or allow the group to dramatically accelerate its plans to penetrate the oxygen therapy market. The boost will also allow F&P to demonstrate the superiority of its technology/product, however offsetting this there could be some over-supply issues in the market as COVID (hopefully) fades.
Overall, we think that FPH’s guidance appears conservative although the global COVID-19 situation is clearly difficult to forecast. We currently have a BUY rating on FPH as a solid healthcare holding for portfolios.
Australia & New Zealand Market Movers
The Australian market (ASX 200 +0.6%) rose for a third straight session yesterday. The continued surge of oil prices helped Origin Energy (+4%) and Woodside Petroleum (+3%) lead the way. The major miners supported gains as the price of iron ore inched higher, remaining elevated just shy of $US130 a tonne.
Harvey Norman shares dipped despite reporting 30.4% Australian like for like sales growth to 21 November and 160% group pre-tax profit growth to 31 October. While both sales and earnings have moderated from the previous trading update, their growth run-rate remains elevated despite Melbourne temporary store closures restrictions easing.
The New Zealand market ( NZX 50 +0.9%) climbed for a third successive day in the green.
In terms of stock newsflow, Kathmandu was a touch lower as it reported mixed first quarter sales numbers. The update contained more positives than negatives, with the seasonally important Rip Curl delivering strong sales growth, offsetting weakness at Kathmandu.
Stride Property reported a strong 1st half 2021 financial year result, underpinned by better than expected rent abatements as well as recurring and one-off management fees. Stride also announced a capital raise for $220m overnight to help fund the purchase of two Wellington properties, and we are waiting for the stock exchange to confirm the placement is completed but we expect to be back trading today (currently halted).
Fletcher Building was higher as it has provided updated operating earnings guidance of NZ$305–320m (up +46% on the prior period) at its annual shareholders meeting.
3 Things Markets Will be Watching this Week
- In a shortened trading week in the US for Thanksgiving, the re-introduction of COVID restrictions and second wave news will remain at the top of headlines.
- At the same time, vaccines are also front of mind with growing speculation that a vaccine will be rolled out this year.
- In New Zealand results season continues with Kiwi Property and Goodman results today and Fisher & Paykel Healthcare due later this week.