NZ EQUITY STRATEGY

Portfolio Considerations: NZ's Safe Harbour

Contrary to the “safe harbour” thematic, NZ's top 10 stocks are more sensitive to global macro-crises than the rest of the market.

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Global Stocks Mixed On Earnings

Global markets were mixed as investors weighed corporate earnings ahead of economic data releases. 

US stocks halt near all-time highs

US stocks fluctuated near all-time highs amid a mix of corporate results as investors await data due to be released on Friday on the strength of the US economy. At the time of writing the S&P 500 was unchanged, while the Dow Jones Industrial Average slid -0.2%.  

Ford sank -9.7% after earnings missed estimates, while General Motors dropped -3.8%. Facebook pared a gain of +1.6% on sales that topped forecasts. MasterCard advanced +1.2% after saying profit rose +6.7% as customer card spending increased. Among technology companies, GoPro rallied +13.1% after posting an adjusted loss that was narrower than estimated while Amazon.com added +1.3%. 

European and UK stocks lower on corporate earnings

European stocks dropped as investors assessed a slew of earnings reports and lenders fell before Friday’s stress-test results. The Stoxx Europe 600 slid -1.0%. Telefonica declined -4.5% after sliding currencies in Latin America dragged on earnings. Adidas gained +2.5% as it raised annual forecasts for revenue and profit. Anheuser-Busch InBev fell -2.5% after SABMiller (+2.2%) suspended internal work on integrating the two brewers while SAB’s Board considers whether to recommend AB InBev’s higher revised offer to shareholders. 

The UK’s FTSE 100 dipped -0.4%. Royal Dutch Shell slid -2.9% after posting profit that was about half the average analyst estimate due to corporate charges (operating results were -8% below expectations). Lloyds fell -5.8% after lowering its guidance for 2016 capital generation, stoking concern about dividend growth. AstraZeneca climbed +7.2% after management targeted growth in sales to at least US$40bn by 2023. Rolls-Royce jumped +14.0% after saying it’s on course to deliver a stronger second half of the year.

Asian stocks approach nine-month high, Japanese stocks lower on Yen

Asian stocks rose toward a nine-month high after the Federal Reserve left interest rates unchanged and signalled a gradual approach to tightening. The MSCI Asia Pacific Index gained +0.2%, while the Shanghai Composite Index closed +0.1% higher, reversing earlier losses of as much as -0.8%. The stronger yen drove Tokyo shares lower as investors awaited the Bank of Japan’s policy decision on Friday. Japan’s Topix dropped -1.1%. 

ASX 200 gains

The ASX 200 added +0.3%. Rio Tinto climbed +2.1%, pacing gains among mining companies as copper and iron ore advanced.

Crude and gold lower, iron ore unchanged

WTI crude fell -1.9% to US$41.13 while gold slid -0.4% to US$1,334.93

Today’s events

StatsNZ: Building Consents Issued - June 2016

AGM: BIL, BLT, KFL, KPG, MOA

MRP Name change - Mercury NZ (MCY)

 

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