Global stocks were higher on Friday (S&P 500 index +0.8%) after a strong jobs report saw US markets hit fresh highs.
Non-farm payroll came in stronger than expected, adding 850,000 jobs for the month of June. Additionally hourly wages rose +0.3% and are up +3.6% year over year. There is still a lot of chat about inflation, but no serious concerns from policymakers yet. The US Congressional Budget Office released their inflation track – 3% in 2021, 2% in 2022.
Healthcare and tech stocks were the strongest performing sectors, with the market viewing the economic numbers at the level where the Fed will continue its "go slow" tapering but not enough to justifying bringing any of their timelines forward. Growth stocks (essentially led by big tech) have played some serious catch up after a spell of underperformance versus value.
Energy and Financials dipped along with Treasury yields, the only two sectors in the red. Tesla (+0.2%) posted a modest rise after announcing second-quarter vehicle deliveries, but the stock's gains were muted after stating supply shortages could still pose challenges.
European stocks were higher on Friday, with the Stoxx 600 index up +0.3%, led by travel and leisure stocks once again.
SKY NETWORK TELEVISION (SKT:NZX / SKT:ASX)
Sky TV (SKT:NZ) shares were a touch higher last week as investors were encouraged by a recent investor briefing. The pay TV operator announced net profit after tax would be on the higher end or could even exceed its previous guidance of $37.5m to $45m. SKT are finally embracing methods to recover revenues and return to profitability, including growing streaming revenue with Neon and Sky Sport now, and an entry into the broadband market and new hybrid Sky Box product. Sky TV also announced recently it has secured a long-term commitment with NRL and NZRL until 2027 as it maintains its hold on core sports content, preventing loss of share to rivals such as Spark sport.
While an encouraging update, we believe operating conditions for Sky TV will continue to be challenging, especially given the high-cost nature of the business struggling with current levels of revenues that are still under heavy pressure.
Most recently, ViacomCBS has confirmed plans to launch its television and movie streaming service Paramount+ in NZ next month. The new streaming service will arrive in NZ on 11 Aug and joins an increasingly crowded streaming market in NZ.
On balance, we remain HOLD rated and would rather watch developments from the couch
Australia & New Zealand Market Movers
The Australian market was higher on Friday (ASX 200 index +0.6%) as the ASX defied a week of lockdowns, ending steady.
Oil prices continued to rise as the top petroleum-exporting countries failed to reach an agreement on supply increases. Energy was the market’s best-performing sector; Woodside Petroleum added 3 per cent to $22.96, Viva Energy advanced 2.4 per cent to $1.95 and Oil Search rose 1.3 per cent to $3.86.
Shares in Westpac ended flat at $25.64 after revealing it was exposed to a $200 million “potential fraud”. The other major banks all climbed higher with Commonwealth Bank jumping 0.8 per cent to $99.49, NAB rising 0.7 per cent to $26.23 and ANZ advancing 1 per cent to $28.32.
ANZ said it expects the Reserve Bank of Australia to announce a weekly $5 billion bond buying plan at its meeting on July 6. The bank also revealed data that highlighted investor lending for housing in May hit its strongest levels in dollar terms in six years.
The New Zealand market edged higher on Friday (NZX 50 index +0.2%). Property related stocks performed strongly, after expectations that the strong economy and low interest rate will keep house prices elevated until 2022. Argosy Property led the market higher up +4.5%, followed by Stride property, with retirement village operators also performing strongly.
Air New Zealand shares surprisingly jumped +1.3% after releasing their operating statistics which showed it carried 101,000 people across the Tasman during May, and 844,000 passengers in total. A2 Milk led the gains with a 5.7% leap to $7.01 as the infant formula exporter slowly recovers from a four-year low. The company has appointed a former Danone executive as chief marketing officer. This is a key role for the business which primarily creates demand for products manufactured by Synlait Milk.
3 Things Markets will be Watching this Week
- Key events this week include Fed's June meeting minutes for their inflation view and bond tapering
- In Australia, covid-19 related developments, RBA's meeting on cash rate, building approvals and retail sales data.
- In NZ, Goodman Property and Investore Property are holding AGM's, and Summerset's second quarter sales update.
