Global markets were lower overnight, as the US market (S&P 500 index -0.4%) fell for the first time in nine-sessions, ending its longest consecutive daily rally since 2017.
US producer inflation rose +0.6% for the month and was up +8.6% year on year (the highest annual figure in 11-years) amid tight supply chains and high commodity prices, which urged investors to take profits from record highs. Rather than a big cause for concern, the news appears to be the market needing an excuse to retreat after a stellar run.
Tesla shares fell -12%, continuing its retreat after founder Elon Musk this weekend asked in a Twitter poll whether he should sell 10% of his stock, with nearly 58% of respondents saying yes. PayPal sank -11% after missing its quarterly revenue expectations and issued weaker-than-expected fourth-quarter and full-year guidance. Conglomerate General Electric rose +4.2% after announced it would split into three separate listed companies focused on energy, healthcare, and aviation.
Through Tuesday morning, 459 companies in the S&P 500 have reported quarterly results, with 81% beating earnings estimates. Third quarter earnings season is winding down now, with economic data an progress in economic re-openings gaining importance as investors’ focus from here to the end of the year.
James Hardie (JHX:ASX)
James Hardie shares slipped -0.7% yesterday despite delivering a record second quarter result, building on positive momentum achieved earlier this year.
Net sales for the second quarter came in at of US$903 million and carried through to the company’s bottom line profit, recognising net income growth of almost 30% to US$155m. Global adjusted earnings (EBIT) increased by 26% year on year to a record US$206m.
The result reflected on strong priced and product mix growth and JHX's net income guidance range was raised by 2%–5% to a new spread of US$580m to US$600m – which may have missed expectations.
We maintain our BUY rating on James Hardie to benefit from the current construction boom and have done very well to date. Due to its current valuation have a high-risk caveat.
Australia & New Zealand Market Movers
The Australian market was down again yesterday (ASX 200 index -0.2%), as gains across travel stocks were offset by losses from a number of blue-chip stocks breaking a three-day winning streak.
Chalice led the market higher soaring +32% after reporting its maiden mineral resource estimate for the Gonneville deposit. Lynas was up +7.6%, after the Australian government laid out a roadmap to reduce emissions in Australia’s transport sector yesterday – expecting to result in hybrid-electric vehicles making up 30% of new cars sold in Australia by 2030.
National Australia Bank fell -0.8% despite delivering a solid rebound result for their 2021 financial year – with cash earnings jumping +76.8% from last year, missing estimates, and weighing down on other major banks which closed weaker as well.
The New Zealand market was up on Tuesday (NZX 50 index, +0.4%) as a number of firms reporting soon mostly traded higher.
Kathmandu ended the day down -0.6% following tis weak update which contained no real surprises given the recently lockdown – adding sales in NSW and Victoria where lockdowns restrictions have eased and have been encouraging.
Fleet management software firm Eroad climbed 2.6% after the Overseas Investment Office consented to its acquisition of Coretex.
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.