NZX braces for earnings glut including F&P Healthcare, Infratil
European stock markets rallied on falling oil prices while Wall St was on holiday.
New Zealand’s NZX is in for a blockbuster earnings day, with Fisher & Paykel Healthcare, Infratil, Goodman New Zealand and Ryman Healthcare headlining the local reporting season today as investors keep tabs on F&P’s outlook and Infratil’s blossoming CDC investment.
The general mood among investors was upbeat as US President Donald Trump’s comments that negotiations with Iran are proceeding nicely reaffirmed optimism that a peace deal will be reached, pushing oil prices even lower.
Bonds rallied as the prospect of the Middle East conflict ending helped cool inflation fears and bond traders dialled back their bets on the Reserve Bank to cut the official cash rate at its Wednesday review, ahead of the government’s budget on Thursday.
On the data radar today, the central bank will release the latest residential borrower figures, while Millennium & Copthorne Hotels New Zealand and CDL Investments hold their annual meetings in Auckland.
Preparing to land
New Zealand’s S&P/NZX 50 index missed the rally across Asia on Monday ahead of a busy earnings day. F&P Healthcare is expected to report strong revenue growth, with analysts watching for any sign of a squeeze on margins in its outlook, while Infratil’s CDC data centre business is expected to underpin another solid result.
Goodman NZ’s cash earnings are expected to tick higher while Ryman is predicted to remain cautious about its outlook as the retirement village operator’s turnaround continues.
Other local companies due to report today include Auckland hospitality operator Savor Group and New Zealand King Salmon Investments.
The earnings flurry is set to dominate in a more positive environment, with Germany’s DAX climbing 2% and France’s CAC 40 advancing 1.8% amid optimism that the US and Iran are closer to reaching a lasting ceasefire as Brent crude oil futures fell 6.3% to US$93.92 a barrel.
The Polymarket prediction market is pricing in a 36% chance of a deal by the end of the month and a 59% chance by the end of June.
Stocks on Wall Street were closed for the Memorial Day holiday, although S&P futures are pointing to a 1% gain when US markets open on Tuesday, and the UK was closed for the Spring Bank Holiday.
Interesting rates
Meanwhile, New Zealand’s Reserve Bank is expected to keep the official cash rate at 2.25% when it reviews policy on Wednesday, with bond yields falling with more subdued inflation expectations.
Bond traders are pricing in an increase of 4 basis points at tomorrow’s announcement, implying an outside chance of a hike, having almost been at 50/50 two weeks ago.
That comes ahead of Thursday’s budget, with finance minister Nicola Willis expected to reveal a constrained outlook against the moving backdrop of the US-Iran conflict.
“Today’s NZX session may see modest support from stronger offshore markets and sharply lower oil prices, but local investors are likely to remain cautious until the RBNZ and Budget announcements provide greater clarity on the domestic outlook,” Moomoo market strategy consultant Greg Boland said in a note.
Australian futures are pointing to a 0.2% gain for the S&P/ASX 200 index when trading opens across the Tasman, while the kiwi dollar was little changed at 58.72 US cents at 7am in Auckland from 58.77 cents yesterday.
Local data today include the Reserve Bank’s monthly loan-to-value ratio and debt-to-income borrower figures.
Hotel operator Millennium & Copthorne NZ and its property development arm CDL Investments hold their annual meetings in Auckland today.
Meanwhile, the Electricity Authority will introduce non-discrimination obligations for the four large electricity generator-retailers to supply hedges to all buyers from July.
Reporting by Paul McBeth. Image from Curious News.
