Earnings season ramps up with Freightways, a2 Milk

Australian futures are pointing to a soft start to the trading week in the antipodes, as earnings season picks up the pace with courier firm Freightways and a2 Milk Co among those reporting on the NZX today, with speculation across the Tasman that Synlait Milk is back in play.

Wall Street set a soft tone on Friday as retail sales disappointed investors, while institutional investors have been paring back their exposure to the likes of the Magnificent 7 stocks, including Microsoft and Meta Platforms.

Meanwhile, Anthropic’s June quarter revenue surged and the Claude chatbot developer is said to be targeting annual sales of up to US$200 billion by the 2028 year in mounting its initial public offering pitch, while Nvidia is reportedly dialling down the scale of its financial guarantee for a large-scale data centre in Ohio to US$120 billion.

And oil prices nudged higher heading into the weekend as the US and Iran remain deadlocked, with US Treasury secretary Scott Bessent threatening unprecedented economic isolation on the Islamic Republic.

Time to report

New Zealand’s earnings season gets into full swing this week, with Thursday the heavy day for reporting when six companies in the S&P/NZX 50 file their annual and first-half results.

Freightways and a2 Milk Co are due to announce their annual results today, with expectations for the courier operator to post solid numbers and sustained growth, while analysts anticipate the milk marketing firm would bounce back from the supply chain issues of the prior year.

Meanwhile, The Australian’s DataRoom column reported a2 Milk and Fonterra Cooperative Group were weighing up a plan to take Synlait Milk private.

Stocks on Wall Street were broadly weaker on Friday after a 0.6% decline in July retail sales missed economists’ forecasts and cooled some of the optimism that had been percolating in markets. The Dow Jones Industrial Average and S&P 500 were both down 0.2% on Friday, while the tech-heavy Nasdaq Composite slipped 0.3%.

Minutes to the Federal Reserve’s last policy meeting will be in view this week, after the CME FedWatch tool showed a smaller chance of an interest rate hike by the central bank at its September review.

“Wall Street remains near record highs, but market leadership is increasingly concentrated in AI infrastructure and semiconductor stocks,” Moomoo market strategy consultant Greg Boland said in a note. “The next test will be whether earnings and consumer spending can support the rally as markets move towards the September Fed meeting.”

Forum website Reddit was among the day’s better performers, surging 13% after it was tapped to join the S&P 500 index from Tuesday, replacing apartment developer AvalonBay Communities.

Different tastes

Meanwhile, Reuters analysis showed almost 44% of institutional investors filing quarterly holdings trimmed their positions on Magnificent 7 megacaps such as Apple and Amazon, while 42% lifted or initiated their stakes of the group of companies.

Nvidia dipped on Friday after the Wall Street Journal reported the chipmaker and ChatGPT developer OpenAI were close to closing a deal to finance an Ohio data centre, with Nvidia shrinking the size of its financial backstop to US$120 billion from an earlier guarantee of US$250 billion.

Anthropic’s march towards an IPO stepped up, with Bloomberg reporting the AI giant posted revenue of US$11.5 billion in the June quarter, surging from US$787 million a year earlier, while Reuters reported the Claude maker was targeting annual revenue of roughly US$190 billion-to-US$200 billion as it pitches ways for potential investors to value the company.

Wall Street trading firm Jane Street posted a US$15 billion loss in July, due in part to the implosion of the Situational Awareness hedge fund, even as it continued to enjoy its best trading year with revenue of more than US$40 billion, according to a Financial Times report.

Brent crude oil futures rose 1.8% to US$88.59 heading into the weekend as the stalemate between the US and Iran continued, with the US expected to reveal a new wave of economic sanctions this week. Meanwhile, Bloomberg reported Middle Eastern producers were transporting large volumes through the Strait of Hormuz undetected to keep prices in check.

The subdued tone was set to carry through to the antipodes, with Australian futures pointing to a 0.4% decline for the S&P/ASX 200 index when trading opens across the Tasman, while the kiwi dollar climbed to 59.15 US cents at 7am in Auckland from 58.66 cents on Friday.

Local data today includes the BusinessNZ-BNZ performance of services index, while Statistics New Zealand releases food prices and electronic card spending figures for July.

Reporting by Paul McBeth. Image from Curious News.