Global markets were mostly higher overnight, as the US market (S&P 500 +0.3%) hit a new record high.
Technology shares again provided most of the leg work, with Nvidia Crop among the top performers (+6.7%) rallying to record highs after receiving a number of analyst upgrades ahead of its quarterly result. Retailers like Walmart Inc and Target Corp also performed well as the market anticipated strong results from the retailers later this week. On the flipside, financials lagged as Warren Buffett signaled he has been selling out of the sector.
Summerset (SNZ:ASX / SUM:NZX)
Retirement village operator Summerset (SUM) rose +5% yesterday after delivering a better than expected result and maintained its interim dividend for the first half of the 2020 financial year.
Despite challenges throughout the year, underlying net profit after tax came in at $45.1m, down -6% from last year but ahead of its guidance, as it maintained strong development margins. Reported net profit after tax came in at only $1m, caused by negative movements in the fair value of its investment property portfolio, lowering Summerset's net tangible asset per share down to $4.91.
We remain BUY rated on Summerset as our top retirement pick due to the MET takeover, and as it is more attractively valued than peer Ryman Healthcare
Australia & New Zealand Market Movers
The Australian market fell yesterday (ASX 200 Index -0.8%) as losses followed a weak end of US trading and ahead of one of its busiest weeks for Australian reporting season.
Banks led falls as sentiment around the health of the Australian economy worsened and the dividend outlook looks weak. Victoria reported its deadliest day, with its state of emergency extended for at least four weeks.
Kogan shares dropped -6% as investors had high hopes for the online retailer, as it declined to provide 2020-21 earnings guidance in line with previous years. JB HI Fi jumped 4% after its statutory net profit jumped +21% to $302.3m for the 2020 financial year, with other retailers with online sales channels also closing higher as retail performed better than expected.
New Zealand shares bounced back strongly yesterday (NZX 50 Index +1.9%) as the 2 week level 3 lockdown was inline with expectations but so far ruled out the worst case scenario of level 4, which closes out the majority of economic activity. With an increased likelihood of the RBNZ implementing lower interest rates it boosted the hunt for yield in the likes of Spark, Infratil and the Gentailers. meanwhile, the mortgage deferral scheme is being delayed until the 31st of March (which was due to expire at the end of September).
The retirement sector rose after Summerset's better than expected result, while the property sector saw strong gains as well. Stocks sensitive to Auckland's lockdown also recovered, Kiwi property group up +4.1%, Kathmandu up +4.5% and Vista Group up +3.3%.
3 Things Markets Will be Watching this Week
- COVID-19 related news-flow remains key, with second wave and lockdown headlines, while US Congress debate what an extension of stimulus will look like.
- Across Australasia we are well underway in terms of companies announcing profit results.
- Locally, newsflow around lockdowns in Auckland and Melbourne/Victoria will also drive investor sentiment.