Browsing public site

23 June 2022
Morning News Summary
Lack of Unexpected Bad News Lifts US Markets

Global markets were broadly in the red as a slump in commodity prices dragged on stocks in Europe, the UK and Asia. In the US, investors' willingness to buy into weakness overcame the recent tendency to sell into strength. US stocks climbed out of negative territory over the course of the day after US Federal Reserve Chair Jerome Powell told the Senate Banking Committee the Fed is committed to fighting inflation, and expressed optimism that the economy can handle the medicine.

US benchmarks in the green despite weakness in cyclicals amid ongoing growth concerns

After opening well in the red, US indices recovered over the day. Powell's acknowledgement that the Fed's goal of orchestrating a soft landing for the economy would be challenging to achieve was no longer a huge surprise to markets. US 2 and 10-year Treasury yields both fell -16bps to 3.04% and 3.15%. The Dow Jones (+0.5%), S&P 500 (+0.7%) and Nasdaq Composite (+0.8%) all climbed as gains in large caps and defensives like property (+2.3%), healthcare (+1.8%) and utilities (+1.5%) outweighed weakness in cyclical sectors including energy (-3.4% as oil prices sank) and materials (-0.9%). Nike (-2.8%) shares were in the red after a broker downgraded the stock to NEUTRAL ahead of its earnings next week due to the impact rising inflation and supply chain disruptions could have. A broker downgraded Airbnb (-1.7%) to MARKETPERFORM, saying the post-pandemic jump in travel demand is already priced in.

Price drops in commodities drag on European and UK stocks

The European stock market snapped a brief winning streak, with the Stoxx 600 dropping -0.7% mostly due to a fall in oil and metal prices that knocked the commodity sector. The energy sector was the biggest drag on the index, with shares across the sector down -3.3% led by losses in Lundin Energy (-7.2%). The commodity heavy FTSE 100 closed -0.9% lower. UK consumer price inflation rose +9.1% in the year to the end of May and retail price inflation hit +11.7%. Glencore lost -6.9% after pleading guilty to charges it had paid US$28m in bribes in Africa. Software stock Micro Focus (-17.4%) disappointed with an -11% revenue decline.​​​​​​​ Housebuilder Berkeley Group lost -2.9% despite a strong result, as investors focussed on a worsening outlook for consumers. Retailer JD Sports Fashion surged +6.6% after delivering record underlying earnings and announcing a corporate governance overhaul.

Asia Pacific benchmarks unanimously in the red

Asian markets were predominantly in the red as markets ignored a Wall Street rally ahead of Fed Chair Jerome Powell's Senate testimony today. The Hang Seng (-2.6%), Shanghai Composite (-1.2%) and Kospi (-2.7%) were all well in the red, while the Nikkei 225's -0.4% loss was more modest. The ASX 200 closed down -0.2%, with chunky losses across property, consumer discretionary and technology stocks dragging the market down. Buy now pay later stocks Zip (-11.4%) and Humm Group (-3.8%) were both deep in the red; five members of Humm's six person board quit after its founder opposed the sale of its BNPL subsidiary to Latitude (-0.8%). After a positive start, a downtrend all afternoon saw the NZX 50 turn to a loss, closing down -0.2%. Fletcher Building managed to ease concerns over the plasterboard supply crisis during its investor day, with shares of the company +5.0% in the green by market close.

Gold little changed, other commodities down — especially oil

WTI Crude oil fell -3.6% to US$105.55, Gold added +0.2% to US$1,836.51 and iron ore stayed relatively flat at US$133.47/MT.

NZ Headlines

Fletcher Building (FBU) is expecting to “take a hit” from the plasterboard supply crisis but told analysts at an investor day in Auckland it sees the impact as only short-term. Although plasterboard represents a relatively small part of Fletcher’s vertically integrated business, the issue dominated proceedings at the investor day.

Today's Events

No events today