Brokers were busy overnight with reports that the Zuellig family was selling a near-$1 billion stake of healthcare products maker Ebos Group, while Canada’s Constellation Software was said to be offloading its cornerstone holding of Eroad.
Meanwhile, Wall Street’s been in a bit of a lull ahead of the big earnings announcement from chipmaker Nvidia, with restrictions on sales to China one of the big things on investors’ minds.
Domestically, earnings season is at full speed with Mainfreight, Ryman Healthcare and Goodman Property Trust the major firms reporting, with undercards in the form of Black Pearl Group, ikeGPS and Trade Window Holdings also on the radar.
And while the dissenting vote on the Reserve Bank of New Zealand’s rate cut has prompted a rethink on how low local rates will go, minutes to the US Federal Reserve’s latest policy meeting show the world’s biggest central bank reckoned the heightened uncertainty warranted a wait-and-see approach too.
Almost there
Stocks on Wall Street were softer, with the S&P 500 down 0.2% in late trading, as investors await Nvidia’s quarterly earnings after the bell. The chipmaker is expected to report a 22% jump in net income, with the outlook for the July quarter a key focus since the tech giant warned investors about the impact of a ban on selling H20 chips to Chinese buyers.
New Zealand’s earnings season reaches a crescendo today after a subdued response to the outlooks from Fisher & Paykel Healthcare and Infratil on Wednesday, which saw the heavyweight companies shed 4.5% and 5.9% respectively.
Mainfreight, Goodman Property and Ryman are the larger companies scheduled for today, with Black Pearl, ikeGPS and Tradewindow also due to report.
Meanwhile, reports emerged last night that UBS launched a $949 million block trade for 26.7 million shares of Ebos Group at $35.50 a share, an 8.9% discount to the closing price on Wednesday. Reuters and the Australian Financial Review reported Zuellig Group’s Sybos entity was selling down its stake to 4.9% of the healthcare products maker.
And the AFR’s Street Talk column also reported Eroad’s one-time suitor Constellation Software tapped Cannacord Genuity to sell its 18.7% stake of the transport hardware and software maker. Eroad’s shares have surged 43% so far this week after hitting its earnings guidance on Monday.
Rate views
The domestic interest rate outlook will also feed into how investors will respond after the Reserve Bank’s policy review on Wednesday delivered the expected quarter-point cut, taking the official cash rate to 3.25%, but introduced a level of uncertainty about the track with a dissenting vote on the reduction.
“There seemed to be some sympathy with that view, as ‘some’ members noted that leaving policy on hold would allow the committee to better assess the impact of increased economic policy uncertainty and guard against the risk of higher-than-expected inflation from supply side effects of increased tariffs,” Bank of New Zealand senior markets strategist Jason Wong said in a note. “The market still sees scope for further RBNZ easing, albeit with less conviction on the short-term path.”
Traders are still pricing in another cut to the benchmark rate in the coming months, but now see an outside chance of a further reduction, having previously seen it as more than likely.
The kiwi dollar rose to 59.61 US cents at 7am in Auckland from 59.47 cents yesterday.
That uncertainty matches the Federal Reserve, with minutes to US central bank’s latest policy review showing the increased risks to accelerating inflation and higher unemployment warranted a wait-and-see approach.
Reporting by Paul McBeth. Image from Peggy Anke on Unsplash.
