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Jobless Claims Remain High

Global stocks were mixed on Thursday, as Chinese equities extended their rally, meanwhile US, UK and European markets headed lower. US jobless claims and coronavirus cases still remain staggeringly high.

US Stocks decline as jobless data remains high and virus fears linger

US Stocks declined as investors processed the latest coronavirus data and economic indicators. The Dow Jones and S&P 500 fell -1.2% and -0.5% respectively, meanwhile the Nasdaq added +0.4%. Shares of Wallgreens (-8.0%), Raytheon Technologies (-4.2%) and Boeing (-3.4%) contributed to the Dow's intraday decline. Other components including Exxon Mobil (-3.6%), Chevron (-3.4%) and Travelers (-2.8%). The US reported a record number of coronavirus cases on Wednesday. Investors also parsed the latest jobless claims data on Thursday. Initial unemployment insurance applications edged lower for the week ending July 4, to 1.314 million, but still remain staggeringly high. Continuing claims, meaning those reapplying for unemployment insurance, dropped by about 700,000 to 18.062 million. United Airlines shares fell -6.2% after the company warned that 36,000 workers, or nearly half its workforce could be furloughed this fall as it continues to lose money. Costco stock rose +3.0%.

Europe and UK slip

The Stoxx 600 fell -0.7% on Thursday. SAP (+4.3%), one of the continents biggest technology companies, said its recovery was surprisingly strong after the release of its 2Q results, as the Asia Pacific region had a strong recovery in software license revenue. Germany reported a 9% rise in exports for May that still left them 29.7% below year-ago levels.

The FTSE 100 slipped -1.7%. The UK on Wednesday rolled out a spending package estimated by the government to be worth 30 billion pounds. Troubled engine maker Rolls Royce slumped -10.9% as the company took a $1.45 billion hit for closing currency hedges early. Shares in UK home builder Persimmon rose +6.4% after it said net reservations rose 30% year-over-year in the final six weeks to June 30.

Asian markets head higher

The Asian stock markets followed Wall Street higher on Thursday after gains for major US tech stocks. The Shanghai Composite (+0.6%), Nikkei 225 (+0.2%) and Hang Seng (+0.4%) all gained.

The ASX200 advanced +0.9% as Santos gained +4.1% and Orica added +3.7%.

The NZX 50 was dragged -2.3% lower by large drops in the electricity company stocks after Rio Tinto (+3.3%) said it would close the New Zealand Aluminium Smelter. Contact Energy (-13.9%) and Meridian Energy (-10.8%) are expected to be most affected by the resulting reduction in demand for power in the lower South Island, at least until transmission bottle necks are resolved over the next few years. Genesis Energy (-7.9%), Mercury (-3.5%) and Trustpower (-3.0%) also fell.

Crude and gold fell while iron ore remained flat

WTI Crude fell -2.9% to US$39.78, gold also fell -0.5% to US$1799.85 and iron ore remained at US$105.03/MT.

NZ Headlines

Summerset Group (SUM) expects first-half underlying profit to be between $40 million and $45m, lower than previously estimated due to the effects of COVID-19.

The Warehouse Group's (WHS) sales are significantly up on the same time last year, despite petering off from levels seen at the end of lockdown due to pent-up demand. Total sales (excluding TheMarket online store) were up 19.3% in the fourth quarter to date and up 0.8% so far over the year to July 31.

Australian mining giant Rio Tinto (RIO.AX) will look to close down New Zealand's only aluminium smelter at Tiwai Point by August 2021, with some 1000 jobs now set to be lost.

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