US markets (S&P 500 Index +3.1%) rallied for the second day in a row as Treasury yields ease from levels not seen in a decade. The US 10-year Treasury note yield has fallen to 3.625% on Tuesday, easing from the high of 4.0% hit on September 27th.
Among the leaders of the S&P 500 were shares of airline and cruise line stocks, including Norwegian Cruise Line (+16.8%), Royal Caribbean (+16.6%) and Carnival (+13.3%), Delta Air Lines (+8.8%) and American Airlines (+8.6%).
Trading of Twitter (+22.3%) was halted multiple times on Tuesday after reports that Elon Musk would be proceeding with the purchase of the company at the price that he originally offered in May ($54.20 per share). The deal is expected to be finalised by Friday.
European markets (Stoxx 600 Index, +3.1%) rallied on Tuesday, with Travel & Leisure stocks (+6.1%) leading all sectors into positive territory. The pound (+1.2%) and euro (+1.6%) continued their respective strengthening against the US dollar.
Shopify (SHOP: NYSE)
Shopify (+13.6%) rose with a broad-based rally in e-commerce retailers on the news of Poshmark’s (+13.1%) acquisition by Naver (-8.8%), a Korean stock exchange listed technology company. Poshmark has agreed to a sale price of US$17.90 per share, which equates to half of its 2021 IPO share price.
Clothes retailers were the largest beneficiaries of the news, with the RealReal (+16.7%), ThredUp (+16.0%), and Farfetch (+13.0%) all posting outsized gains.
Still, Shopify has seen its share price plunge by -77.0% year-to-date. In July, the company cut ~10% of its workforce and acknowledged it had overestimated how much e-commerce would continue to grow in a post-pandemic environment.
The extent to which Shopify can grow into its valuation is really the decision investors need to make with this company. Shopify still trades at 6.4x forward sales, which is much less than its five-year average of 30 but is still at a premium compared to competitors Wix.com (+6.9%) at 3.2x and Squarespace (+5.7%) at 3.6x.
Australian & New Zealand Market Movers
The Australian market (ASX 200 Index, +3.8%) reacted very favourably to the RBA rate hike of 25-basis-points yesterday. With most analysts predicting a 50-basis-points hike, the dovish choice by the RBA has helped sooth fears that the bank’s monetary tightening would push the economy toward recession.
All ASX sectors posted gains of at least +1.9%, led by IT (+4.9%) and Materials (+4.5%).
The Australian dollar (-0.4%) dropped to $0.6480 against the US dollar, after recovering from a -1.0% drop earlier in the session.
The New Zealand market (NZX 50 Index, +1.2%) climbed on Tuesday, feeding off the US, European, and Aussie rallies.
Real Estate stocks (+2.7%) made back some of the losses from Monday, with Kiwi Property Group (+5.7%), Vital Healthcare Property Trust (+2.9%), and Goodman Property (+2.5%) being some of the notable rises.
The NZ dollar (0.0%) traded flat against the US dollar.
What Markets will be Watching this Week (UTC –4)
Monday
AU RBA Interest Rate Decision
Tuesday
US JOLTs Job Openings (AUG)
NZ RBNZ Interest Rate Decision
Wednesday
US Unemployment Change (SEP)
US Balance of Trade (AUG)
Thursday
AU RBA Financial Stability Review
Friday
Us Non Farm Payrolls (SEP)
