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Morning report

Bubble Fears Mount

Following the US market's strong bounce on Monday, Asian equities retreated on Tuesday after China's banking regulator warns of inflated valuations in global markets. Europe and the UK ended modestly in the green ahead of the UK budget announcement. US stocks gave back a part of Tuesday's gains.

Wall Street dips

US stocks retreated on Tuesday for no specific reason, with bond yields little changed, no economic data due out, and most company results beating expectations. The S&P 500 fell -0.6%, the Dow Jones slipped -0.4% and the Nasdaq tumbled -1.3%. Apple (-1.6%) and Microsoft (-1.3%) were down in line with the information technology sector. Zoom inched -0.3% lower despite forecasting currentquarter revenue above estimates, as it expects millions of people to continue using its video-conferencing platform. Target lagged with a -4.7% decline despite the company beating top and bottom-line estimates with 21% YoY revenue growth. Kohl's (+1.2%) traded higher following its positive earnings reports. Merck & Co rose +0.5% on a report that the company will help produce Johnson & Johnson's (-0.2%) COVID-19 vaccine.

Stoxx & FTSE end higher

In Europe, the region wide Stoxx 600 climbed +0.2%. Gains in shares of consumer companies such as Reckitt Benckiser (+1.3%), Unilever (+1.0%) and Nestlé (+0.9%) helped push Europe into the green. Hello Fresh shares tumbled -6.5% even after the company report 4Q sales above market expectations. Luxury goods company Kering was up +2.0% after investing in second-hand apparel marketplace Vestiaire Collective.

London's FTSE 100 rose +0.3%, led by gains in mining and financial stocks. Finance minister Rishi Sunak is expected to announce more borrowing on top of almost £300b of COVID-19 spending and tax cuts in his annual budget statement late tonight (NZT).

Asia Pacific mostly lower

Despite the boisterous finish in US equity markets on Monday, Tuesday was a tough session in Asia after the China Banking and Insurance Regulatory Commission expressed concern about bubbles in global financial markets and in China's property sector. Hong Kong's Hang Seng index closed down -1.2%, while China's CSI 300 shed -1.3%. The Nikkei 225 lost -0.9%.

The ASX 200 fell -0.4%. The Reserve Bank kept its benchmark cash rate steady at 0.10%, as expected at its March board meeting. Fortescue Metals sank -4.7%, BHP skidded -2.5% and Rio Tinto fell -0.4%. Gains in financial heavyweights limited market losses. ANZ leapt +1.1% and Macquarie jumped +1.0%.

The NZX50 added +0.4% as A2 Milk (+5.5%) and Meridian Energy (+4.2%) rebounded.

Crude and gold increase

WTI Crude rose +0.4% to US$60.86 and gold increased +0.6% to US$1733.76.

NZ Headlines

State-owned enterprise Airways New Zealand’s first-half loss was better than it budgeted for, although its revenue continues to be hit by COVID-19. The air traffic controller reported a loss of $13.8 million in the six months to December 31, which is 48% better than the $26.4m loss it had budgeted for in June. But it’s well down on the $16.2m profit it made in the same half the previous year.

The Brewers Association of New Zealand is calling on targeted support for hospitality from the government as beer consumption drops.

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