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Morning report

Patent Waiver Talk Hits Healthcare, Briefly

Healthcare investors were spooked on Thursday by US President Joe Biden's support for patent waivers on COVID-19 vaccine technology, but sentiment seemed to bounce back after German Chancellor Angela Merkel signalled her opposition. The Bank of England's optimistic view on the economy pushed UK stocks higher, despite plans to slow QE.

Blue-chips and defensives up, small cap tech down

Mega-cap tech stocks, consumer staples, utilities and financials led the gains on Wall Street on Thursday as investors seemed to prefer blue chips, while healthcare, consumer cyclicals and energy lagged. An upbeat jobless claims report helped push the Dow Jones (+0.5%) to record highs, while the S&P 500 inched forward +0.2%. Biden's talk of waivers on COVID-19 vaccine patents kept Moderna (-2.4%), Pfizer (-2.2%) and Novavax (-1.4%) in the red even after partly recovering on news of Merkel's opposition to patent waivers. The tech-heavy Nasdaq recovered from a -1.1% loss in the morning to be flat by lunch, before grinding lower again in the early afternoon. Small-cap tech stocks (-2.6%) and other high-growth stocks like those held by the ARK Innovation ETF (which sank -5.0% today, taking it down by -17% over the last two weeks) continued to suffer negative momentum. Uber (-7.1%) signalled it would pay drivers more and give UK drivers benefits. Fastly (-26.0%), Etsy (-14.6%) and Twilio (-9.8%) were down sharply following their earnings reports. In contrast, PayPal rose +2.4% after its results came in better than expected.

Bank of England slows bond purchasing programme

The Stoxx 600 (-0.1%) was little changed. Oil heavyweights (-1.3%) were dragged down by weaker oil prices, while the top sector, food & beverage (+0.9%), was helped by Anheuser-Busch InBev leaping +5.6% after beating first quarter earnings estimates. Frankfurtlisted shares of vaccine makers Novavax (-11.3%) and Moderna (-11.5%) finished down sharply after Biden's support for patent waivers. Satellite operator SES (+8.5%) announced it would repurchase €100m worth of shares. Volkswagen fell -3.0% despite raising its 2021 operating margin targets. The FTSE 100 (+0.5%) hit a one-year high as the Bank of England announced it would slow down its bond-purchasing programme, saying it expected the English economy to grow at its fastest rate since World War II.

Indices were mixed as Asian exchanges return from holiday

China’s CSI 300 dipped -1.2% and the Shanghai Composite inched down -0.2% while Japan's Nikkei added +1.8% on the first day of trading in those markets this week. The Kospi (+1.0%) and Hang Seng (+0.8%) both gained. The ASX 200 shed -0.5%, as most sectors apart from energy and mining ended weaker. National Australia Bank dropped -3.0% as revenue growth missed estimates. ANZ lost -0.9% after numerous brokers lowered their target prices on the stock following its results announcement on Wednesday. CSL inched down -0.3% after completing a US$450m licensing deal for UniCure's (+7.0%) gene therapy drug candidate that would compete with CSL's existing haemophilia products if it succeeds in trials. Afterpay dropped -7.0% amid weakness in high-growth tech stocks globally. The NZX 50 shed a further -0.7%, with Fisher & Paykel (-2.1%) continuing to weigh on the index.

WTI crude down, gold and iron up

WTI crude slipped -0.8% to US$65.10/bbl. Gold added +1.6% to US$1,815.26/oz while iron ore rose +0.4% to US$190.41/MT.

NZ Headlines

Pathology group APHG has posted a bumper profit for the year to December, boosted by its major role in providing COVID-19 tests.

The Bank of New Zealand (BNZ) has followed other major banks in reporting a much improved first half result, thanks to the economy bouncing back better than expected from the COVID-19 crisis.

Fast food chain, Burger King, has been sold to Tahua Capital for $30.48 million.

The Fonterra Shareholders Fund (FSF) will disappear from the NZX if the dairy co-op’s (FCG) farmers support capital structure changes proposed by their board.

Spark (SPK) services have been restored to all customers impacted by a Chorus (CNU) cable cut in the Wairarapa and Hawke’s Bay on Wednesday.

Z Energy (ZEL) issued a slightly disappointing profit guidance range for the current fiscal year, but signalled the dividend will be 14cps, at the top end of the prior guidance range.

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