Jarden Brief: Elon Musk adds US$25 billion to his wealth as Tesla shares soar

Keeping you up to date with the latest market moves, in association with Investment firm Jarden

New Zealand

Yesterday’s session was fairly flat with both the NX50 and NZ10 recovering 0.2 per cent.

The top performing sectors were property companies, up 1 per cent and consumer cyclicals up 0.8 per cent. Energy and financials were the worst performing sectors of the day, down 3.6 and 1.2 per cent respectively.

Meridian Energy rose the most, up 3.5 per cent, with Air New Zealand close behind up 3.4 per cent and agricultural company Skellerup Holdings rounding out the top three, rising 3.1 per cent.

The worst performing companies yesterday were energy retail business Mercury NZ, down 4.1 per cent, Z Energy, down 3.6 per cent and Chorus, falling 2.1 per cent.

Recently listed MyFoodBag competitor Hellofresh gained 6.1 per cent overnight, despite no apparent news although Australian peer Marley Spoon closed flat.

Z Energy updated their financial year 2021 guidance and tightened their expected operating earnings range from $235million – $265 million to $235 million – $245 million yesterday.

Making headlines was Air New Zealand’s admission of their mistake in using a plane for a domestic flight without deep cleaning it after it carried international passengers. In a statement they said the incident happened “a number of months ago” and that continuous review and improvement of processes was occurring.

Meridian and Contact Energy, large power companies, are facing significant bills to address a situation which occurred in 2019. An “undesirable trading situation” was ruled last year by The Electricity Authority in response to Meridian and Contact spilling excess water from South Island hydroelectric dams which caused a jump in electricity prices costing customers approximately $70 million.

The authority ruled to reset spot electricity prices from December 3 to 27, 2019. This means some customers can be expecting refunds following the price reset with the situation costing Meridian $11.3m and Contact $4.9m. Once price volatility offsetting hedge contracts are accounted for, the financial impact on the companies can be expected to be lower than the previous figures and could explain why Meridian did not fall yesterday.

New Zealand real estate data was released yesterday. While 11 months of data had already been released, the month of February saw Auckland house prices increase by $25k a week – to round out the year up 21.5 per cent on a trailing twelve-month basis. House sales increased 10.3 per cent in the same period.

February also saw houses being snapped up faster with the median time to sell a home falling from 29 to 26 days. Some in the industry attribute the increased volume to loan-to-value ratio changed rules which will begin to take effect this month. These rules include a 30 per cent required deposit for investors to secure a house which will become 40 per cent from May onwards. However, while house prices are up, rents were not significantly changed – up 2.6 per cent year on year nationally in February.

INTERNATIONAL
US Markets:

US markets continued yesterday’s gains with the S&P500, Dow Jones Industrial Average, and Nasdaq trading up by 1.5, 1, and 2.6 per cent respectively with the S&P500 reaching a record high.

The best performing sectors were Technology and Communication services which were the main contributors to the Nasdaq’s fortunes overnight. The worst performing sector, Financials, currently trades flat with no change.

Single stock winners today include mining company Freeport-McMoran Inc up 7.6 per cent on the back of another increase in copper prices while oil and exploration company Occidental Petroleum Group currently trades up 7.3 per cent after a flurry of target price upgrades and interest from multiple investment banks.

General Electric (on yesterday’s winners’ podium) erased gains currently down 9 per cent, with tech company Oracle Corp down 7.1 per cent after an earnings report was released.

Investors had further reason to be encouraged this morning after former Food and Drug Administration (FDA) chief Scott Gottlieb told CBNC that President Joe Biden is highly likely to meet his goal of 100 million Americans vaccinated after the first 100 days of office.

More so, Biden recently announced plans to secure another 100 million doses of the Johnson & Johnson single shot vaccine which Gottlieb is confident will leave the US with sufficient supply to vaccinate every American. The J & J vaccine has also been approved for use in the EU.

As expected, Tesla was in the mix up 20 per cent on Tuesday as CEO Elon Musk added a handsome US$25 billion to his personal wealth. Tesla had an exceptional sales performance in China last month despite a fall in overall car sales for the country.

Asia:

Asian markets were in the green overnight with the Shanghai Composite up by 2.4 per cent, the Nikkei increased 0.6 per cent while the Shenzhen gained 2.2 per cent.

News includes commentary from Singapore’s travel minister Ong Ye Kung who seems optimistic about travel bubble arrangements with Hong Kong and other neighbouring countries. It was also a strong week for Chinese electric carmakers Nio, Xpeng Motors and Li Auto (listed in the US) who added a collective US$14 billion in market cap on Tuesday – including Nio, which is up 1,000 per cent this calendar year.

Commodities:

Amongst the commonly tracked commodities, Gold held value at US$1,723.20 per ounce. Crypto currencies were mixed with Bitcoin up 0.7 per cent to US$56,721.65 while Ethereum was down 1 per cent to US$1,791.26.

WTI Crude jumped 2 per cent to US$65.84 per barrel. Much in the headlines over the past fortnight, US 10-year treasury yields remained stable at 1.535 per cent.

Australia

The ASX 200 closed flat on Thursday with a 0.2 point decrease to 6713.9.

Consumer Discretionary was the best performing sector of the day, up 1 per cent, driven by the announcement of a A$1.2 billion subsidy from the government to make about 800,000 half-price domestic airfares available to Australian consumers.

It was a good trading session for Flight Centre Travel Group, the top gainer of the day with a 9.2 per cent increase to A$19.44, and Corporate Travel Management, also one of the top performers, rising 4.3 per cent to A$21.91. The two made their gains on the back of the subsidy announcement among others like Qantas Airways (+2.5 per cent) and Sydney Airport (+2.1 per cent).

However, Regional Express airline and the tourism industry and unions have raised concerns that the bulk of the subsidy would benefit Qantas and not sufficiently reach the smaller airlines nor benefit businesses reliant on tourism. They are also concerned that the subsidy would not prevent further job losses within the industry due to the JobKeeper scheme running out by the end of the month.

The worst performing sector of the day was Information Technology, decreasing 1.6 per cent, which is suffering under increasing yields and growing concerns about future inflation, which would erode value for investors in the technology sector.

This also led to Afterpay being one of the worst performers of the day, down 3.7 per cent to A$111, almost halving the gains made in the previous trading session.

IDP Education Limited is an education services provider focusing on international students. Yesterday, the company announced a restructuring of the shareholding of Education Australia’s 40 per cent stake.

The process will include a 15 per cent divestiture through a market sell down. The restructuring announcement led to the company being the worst performer of the day, down 5.7 per cent.

The Finance Sector Union (FSU) is concerned about unsuccessful negotiations with the Commonwealth Bank of Australia (CBA) regarding an enterprise agreement between CBA and the union to prevent staff underpayment. CBA plans to let its 32,000 employees voice their opinion about the matter in a ballot but would prefer to keep them on individual agreements.

Several cities across Australia are reaching record highs for property prices. Predictions say nationally the prices would increase by 20 per cent between mid-last year and the end of 2022.

Sydney house prices were up to A$895,933 as the median dwelling value – toppling its 2017 record. Speculation continued about when the Australian Prudential Regulation Authority will step in to introduce stricter regulations, despite the Reserve Bank of Australia noting multiple times that it did not feel a need to control the situation at the current time.

• For more information on the latest market moves, get in touch with Jarden.

Disclaimer: This Morning Brief has been prepared in good faith and reflects opinions and views at the time of publication, using external sources, systems and other data and information we believe to be accurate, complete and reliable at the time of preparation.We make no representation or warranty as to the accuracy, correctness and completeness of that information, and will not be liable or responsible for any error or omission.This Morning Brief is not to be relied upon as a basis for making any investment decision. Please seek specific investment advice before making any investment decision. Jarden Securities Limited is an NZX Firm, a broker disclosure statement is available free of charge at www.jarden.co.nz. Jarden is not a registered bank in New Zealand. Full disclaimer available at: https://www.jarden.co.nz/limitations-and-disclaimer

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