Global markets started October on mixed footing Friday, as the US market (S&P 500 index, +1.2%) snapped a five-day losing streak after President Biden became more involved in negotiations around the US$1 trillion infrastructure bill, while European markets were weakened by supply chain constrains.
US Gains were broad based across the market following the recent sell off over the week, with Energy Telecommunications and Financials leading the way amidst optimism around the economy re-opening.
Merck Shares jumped +8.4% after the drug maker said their oral antiviral treatment for covid-19 reduced the risk of hospitalisation or death by 50% for patients with mild or moderate symptoms. The news boosted travel stocks Southwest Airlines rising +5.6% with an added boost from JPMorgan’s upgrade on the stock.
European Markets (Stoxx 600 index, -0.4%) were down on Friday, with mining stocks leading losses while travel and leisure shares jumped.
Closer to home, Covid and lock-down related news dominates headlines on both sides of the Tasmam.
All eyes in NZ will be on the government announcement with its Covid update this afternoon and the expected lock-down road map for Auckland. 2 covid-19 cases were found outside of Auckland region in Waikato and Raglan putting the two regions into 5-day lock down.
Key events this week include the RBNZ rate call this Wednesday, and RBA decision this Tuesday. The RBNZ announcement will be particularly interesting given the market is expecting and pricing in a 0.25% interest rate hike.
Summerset (SUM.NZX / SNZ:ASX)
We have made great gains from SUM since upgrading it to a BUY in August last year as its shares have almost doubled. Shares in the retirement village operator continued to trend higher last week after announcing the purchase of its fifth Melbourne property, the current property more centrally located 14km from Melbourne CBD. Summerset are looking to grow their presence to meet rapid growth in aging population, gaining consent to commence construction on its first Victorian site, and expects their first Australian homes to be built in 2022 on that site.
Our overall view on Summerset’s underlying business remains positive, with strong long-term growth potential. We continue to remain comfortable with our BUY rating as our favoured large cap retirement village operator to gain exposure to the sector (preferred over Ryman).
Australia & New Zealand Market Movers
The Australian market fell on Friday (ASX 200 index -2%) wiping out Thursday's gains to end a volatile week down -2.1%, as investors fear the risk of a correction remains high.
Heavy falls from the major banks didn’t bode well. While a +4.5% increase in iron ore prices wasn’t enough to protect the major miners Rio Tinto falling -2.9%, Fortescue down -2.6% and BHP slipping -2%, as well as smaller miners performing weak as well on concerns over economic growth.
Travel stocks provided some hope edging higher as Prime Minister Scott Morrison confirmed relaxed travel restrictions with international boarders will open in November for fully vaccinated citizens or residents.
The New Zealand market was basically flat on Friday (NZX 50 index +0.03%) again avoiding the harsh sell-off felt globally. Investors have so far digested global economic uncertainty, upcoming rate hike inflationary pressures, as well as the implications of the current lockdown.
Vector Led the market higher up +3.2%, followed by A2 Milk (+2.6%) Tourism Holdings (+2.3%) and Ebos (+2%) .
Kiwi Property shares were unchanged after announcing it bought another 7,144 square metre property at Sylvia Park for $27.5m with settlement due on June 24 2022, The property neighbouring their lifestyle part of Kiwi's shopping, cinemas, office and soon-to-be build-to-rent (BTR) complex.
3 Things Markets will be Watching this Week
- Key events this week include RBNZ rate call this Wednesday, and RBA decision this Tuesday.
- US Non-Farm Payroll Data due later this week (monhtly employment figures)
- Covid and lock-down related news flow both sides of the Tasman.
