Morning report

Positive Economic Data Keeps Investors Happy

Major global indices were all in the green on Thursday as the earnings season continued to impress, while positive economic data in the US and Europe helped boost sentiment. Chinese stocks saw a rebound following the market's recent battering.

Fed’s Wednesday comments continue to push indices higher

Major US indices stood firmly in positive territory on Thursday as investors continued to draw optimism from Fed Chair Jerome Powell’s dovish comments on Wednesday, healthy corporate results and agreement between the White House and a bipartisan group of senators on a US$1t infrastructure package. GDP rose at an annualised +6.5% rate in the June quarter, missing consensus expectations but still showing the US economy was recovering strongly. The S&P 500 and Dow Jones both advanced +0.6%, while the Nasdaq added +0.4%. All sectors except communications were in the green. Facebook released better than expected earnings, however disappointing guidance caused the stock to drop -4.2%. Mobile chip maker Qualcomm surged +5.8% after beating earnings expectations and reaffirming its view that chip supply will improve by the end of 2021. Quick-service restaurant group Yum! Brands (+5.8%) and Mastercard (+1.7%) beat quarterly sales expectations. Ford (+3.4%) lifted profit guidance. Robinhood fell -6.9% on IPO.

Rising economic confidence boosts investor sentiment

The Stoxx 600 added +0.5% amid gains in commodity majors and positive economic data. The Eurozone economic confidence index rose to 119.0 in June, beating consensus expectations, and Germany’s unemployment rate fell more than expected. Volkswagen gained +1.7% after the car maker lifted its profit margin targets for the second time in three months. Danone (+6.5%) reported solid Q2 sales and said it plans to replace most of its board. Nokia (+4.6%) raised its profit forecasts. Brewer Anheuser-Busch InBev (-5.6%) missed profit expectations as rising costs for cans and distributions offset some of its sales growth. Nestlé dipped -0.4% after also missing profit expectations. The FTSE 100 rose +0.9% as companies continued to release strong results. Royal Dutch Shell and Anglo American jumped +5.4% and +3.8% respectively after both companies announced share buyback plans following stellar earnings reports. The post-pandemic rebound in Smith & Nephew's (-6.3%) orthopaedic sales was less impressive than expected.

Hong Kong stocks rebound

Asian indices ended in positive territory on Thursday, with Hong Kong Hang Seng (+3.3%), China’s CSI 300 (+1.9%) and Shanghai Composite (+1.5%) all advancing as investors bought the dip after the recent pullback in stocks like Tencent (+10.0%) and Alibaba (+7.7%). Japan’s Nikkei 225 advanced +0.7%, while South Korea’s Kospi inched forward +0.2%. The ASX 200 rose +0.5% after mining heavyweights Fortescue Metal (+1.9%) and Rio Tinto (+1.5%) released stellar first-half results. Australian Pharmaceuticals Industries (+2.1%) rejected Wesfarmers' (-0.2%) takeover offer. A broker downgraded its recommendation on National Australia Bank (-0.5%). ​​​​​​​Harvey Norman and Xero both gained +1.4% following positive commentary from brokers. The NZX 50 added +1.1% as Mainfreight (+4.6%), Ryman Healthcare (+3.9%) and Pacific Edge (+2.5%) jumped after their AGMs.

WTI crude and gold gain while iron ore dips

WTI crude rose +1.3% to US$73.33/bbl and gold gained +1.8% to US$1,831.20/oz. Iron ore dipped -0.3% to US$214.44/MT. ​​​​​​​

NZ Headlines

Soft tissue regeneration company Aroa (ARX), listed on the ASX, has completed the first of two separate planks to a A$52m capital raising.

Supermarket shoppers are forced to pay too much for not enough selection because of a lack of competition, a draft Commerce Commission report into the market has found.

Cancer diagnostics company Pacific Edge (PEB) is maintaining momentum thanks to a record first quarter. Ports of Auckland’s troubled automation project looks unlikely to be active until March next year, although the port warns it could further push out the delivery date.

Rocket Lab has racked up big losses since it launched New Zealand into the space industry, with any profits still years away, according to a regulatory filing.

NZX-listed aged care provider Ryman Healthcare (RYM) has had a record first quarter and purchased a twelfth site in Victoria, it told investors at its annual meeting in Wellington on Thursday.

Two Degrees intends to appoint former Port of Tauranga (POT) chief executive Mark Cairns as its chair, should its proposed IPO proceed.

Auckland-based steel distributor Vulcan Steel is reportedly preparing a $500m initial public offer and listing on the NZX and ASX.

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This morning summary has been provided by Forsyth Barr Ltd and is for general information purposes only - your financial situation or goals have not been taken into account. If you would like more information or advice that is specific to you, talk to your financial adviser.