Global markets were lower overnight, with US markets down (S&P 500 Index, -1.2%) as investors nervously brace for the upcoming earnings season and US inflation data.
A greater focus will be on any earnings forecast as companies provide an indication on the impact of rising interest rates and greater inflationary pressures, and as Wall Street debates the likelihood of a recession.
Most sectors traded lower telecommunications and consumer discretionary leading losses. Twitter plunged -11.3% after Elon Musk said he is no longer interested in the takeover, which is set to lead to an interesting legal battle, while tech shares in general performed poorly the NASDAQ Index down -2.2%.
European Markets (Stoxx 600 Index -0.5%) were also lower. There was more talk about European gas supply overnight seeing the dollar continue to break to new 20 yr highs. The Euro & Yen traded at their weakest in 20 & 24 yrs respectively
Spark New Zealand (SPK:NZX)
Spark shares are up about +2.6% currently reaching 15-year highs, after announcing the sale of 70% of its TowerCo business for $900m to the Ontario Teachers’ Pension Plan Board. The implied $1.175 billion valuation of the whole business equates to an attractive 33x operating earnings (EBITDA) multiple. The transaction is subject to Overseas Investment Office approval and is anticipated to occur in the first half of the 2023 financial year.
The proceeds from the transaction, enable direct shareholder returns and investment in future growth opportunities that will accelerate Spark’s transition from traditional telecommunications to higher-growth digital services. Spark intends to release an updated capital management policy at its full-year results on August 24.
We are Buy rated on Spark
Australia & New Zealand Market Movers
The Australian market (ASX 200 Index -1.1%) fell yesterday, giving back most of its gains from the previous week as investors were spooked by the detection of a new Ba.5 covid variant in Shanghai.
All sectors were lower except for healthcare, and materials.
EML payments slumped -24.6% after its CEO Tom Cregan suddenly resigned.
Costa group ended the day down -8% after a sharper fall prompted the company to provide a trading update citing citrus earnings would be weaker than expected in the second half due to weather incurred damage, but that it was on track to deliver on its half-year earnings guidance.
The New Zealand market (NZX 50 Index, -0.6%) was down on Monday as markets braced for the upcoming RBNZ announcement on Wednesday.
Most shares edged lower on light volume, A2 Milk and Fisher and Paykel Healthcare were both down -2.7%. Summerset ended the day up +0.5% following its quarterly sales update, with mixed movements across retirement village peers.
3 Things Markets will be Watching this Week
- Highlights this week include US inflation data and second-quarter GDP data from China.
- Locally, the RBNZ meets with a 50bp lift to the cash rate expected.
- Later in the week all eyes will be on US corporate quarterly earnings announcements, which kick off with the major banks on Thursday.