Jarden Brief: Hong Kong to start ban on UK flights this week

Keeping you up to date with the latest market moves, in association with Investment firm Jarden

New Zealand

The S&P NZ50 finished the day down 0.2 per cent.

The best performing sector on the day was Health Care, up 0.8 per cent. The next best performing sector was Real Estate, which added 0.3 per cent. The worst performing sectors on the day were Consumer Discretionary, falling 1.4 per cent and Consumer Staples, down 1.2 per cent.

News that the Trans-Tasman bubble would be suspended due to growing concerns about Sydney’s most recent outbreak had the market bearish on travel and reopening stocks. Beyond immediately dampening prospects of a visitor boost over the Australian school holidays, the lockdown reminded the market about how lumpy the path to ‘reopening’ may be.

In line with this trend, the worst-performing company on the day was tourism industry operator Tourism Holdings, which lost 3.1 per cent, as well as Air New Zealand, which fell 2.5 per cent. Auckland Airport also had a bad session, trading down 2.2 per cent.

Dairy conglomerate Fonterra, down 2.7 per cent, also underperformed. The company announced it had completed the sale of two more joint venture farms in China. The farms in Shandong province will be sold to Singapore-based AustAsia Investment Holdings for US$115.5 million. The sale is unconditional and FSF is expected to receive NZD88 million of the proceeds (as a 51% stakeholder in the joint venture).

The best performing company on the day was real estate investment trust Precinct Properties, which jumped 3.3 per cent, followed by index heavyweight Fisher and Paykel Healthcare, which rose 1.7 per cent. The third best-performing company was retail bank Heartland Group, which climbed 1.5 per cent.

INTERNATIONAL
US

The US markets were mixed overnight, with reopening-exposed stocks losing momentum in favour of technology stocks. The Dow Jones Index was down 0.5 per cent, the S&P was up 0.1 per cent and the NASDAQ Composite grew 0.7 per cent with the NASDAQ 100 reaching a new record high.

Tech shares outperformed (+1.0 per cent) while the Energy (-3.1 per cent), Financials (-0.8 per cent) and Industrials (-0.5 per cent) sectors underperformed.

The FDA has added a new heart inflammation risk warning for the Pfizer and Moderna Covid-19 vaccines – although the risk of this is rare. Around 1,200 people have been afflicted with muscle or tissue inflammation symptoms, a low rate of 12.6 cases per 1 million doses.

Leading the market down were reopen exposed stocks such as Booking.com (-3.7 per cent), Boeing (-3.7 per cent) and cruise operators waned, with a resurgence of Covid cases in the UK prompting some countries to impose travel restrictions on the heavily vaccinated country.

Boeing was hit by a second dose of bad news after the Federal Aviation Authority asked it to perform extra tests on its 777 jet following a ‘test flight incident’.

On the other hand, stay at home stocks such as Etsy (+6.0 per cent), Nvidia (+5.5 per cent), Apple (+1.5 per cent) and Zoom (+3.9 per cent) traded well.

UK-listed luxury brand Burberry also performed poorly, sliding 8.7 per cent after its established CEO Marco Gobbetti announced he will be resigning to join Italian fashion company Salvatore Ferragamo (-2.7 per cent).

Asia

Asian markets closed relatively flat with the Nikkei down -0.1 per cent, the Hangseng down -0.1 per cent and the Shanghai Composite flat.

Geopolitical tensions continued with India shifting 50,000 troops to the Chinese border in a historic move against the aggressive regime. Meanwhile, Hong Kong announced it will begin to ban flights from the UK beginning from Thursday in a bid to curb the spread of Covid-19.

Commodities

Metals continued to drop following China’s announcements that it would begin selling down some of its stockpiled resources last week. Gold fell 1.3 per cent to US$1,778.69 an ounce while Copper dropped 1.5 per cent to $427.50.

Oil was also down by 1.5 per cent to US$74.66 a barrel, with the OPEC hiking output despite the delta variant’s continued spread, creating a bearish indicator for demand.

Bitcoin recovered by 5.0 per cent to US$34,258.76 while Ethereum surged 15.1 per cent to US$2,091.41 after a strong weekend.

Australia

The S&P/ASX 200 was roughly unchanged yesterday, with the index ending flat at 7,307.3 points.

Markets continued to react to Covid-19 announcements, which saw 18 new local cases in the New South Wales region yesterday.

Leading sectors comprised of both Consumer Non-Cyclicals and Healthcare, each making gains of 1.3 and 0.9 per cent, respectively.

Both Redbubble Ltd (up 8.2 per cent) and Kogan.com (up 6.6 per cent) led the way with strong performances at yesterdays close. Both online retailers benefitted from widespread lockdown measures which are expected to generate increased sales volume on their respective shopping platforms.

On the flip side, Industrials (down 2.3 per cent) and Real Estate (down 1.1 per cent) were the laggard sectors at yesterday’s close.

Interestingly, weighing down index performance was single stock loser Afterpay Ltd, which fell 7.5 per cent despite being a buy now pay later service, a sector which usually trades well with news of impending or extended lockdown periods.

The tumble may have been a delayed reaction to news that global bulge bracket bank Citi will be releasing a buy now pay later product to undercut the incumbents in the sector.

Alternatively, the market may have reacted negatively to Afterpay announcing that it had acquired an equity stake in an international competitor, Dubai-based Postpay Ltd.

Joining Afterpay was mining company Gold Road Resources, which slipped 7.4 per cent. The company announced quarterly earnings guidance and operating statistics on Monday to which shareholders reacted unfavourably.

• For more information on the latest market moves, get in touch with Jarden.

Disclaimer: This Morning Brief has been prepared in good faith and reflects opinions and views at the time of publication, using external sources, systems and other data and information we believe to be accurate, complete and reliable at the time of preparation.We make no representation or warranty as to the accuracy, correctness and completeness of that information, and will not be liable or responsible for any error or omission.This Morning Brief is not to be relied upon as a basis for making any investment decision. Please seek specific investment advice before making any investment decision. Jarden Securities Limited is an NZX Firm, a broker disclosure statement is available free of charge at www.jarden.co.nz. Jarden is not a registered bank in New Zealand. Full disclaimer available at: https://www.jarden.co.nz/limitations-and-disclaimera>

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