12 SEP 2022 – Monday Market Highlights – Transcript

Nick Morgan
Good morning. It’s Monday the 12th of September and I’m Nick from Milford. Looking at the key economic news from last week, in the US, we had the non manufacturing isn index out on Wednesday. The index unexpectedly rose higher to 56.9. Up from 56.7 in July, and a head of market expectations of 55.1. Both new orders and business activity expanded faster than expected. And employment rebounded despite the continued tight labor environment. There were various fed speakers during the weekend. But one of note was Vice Chair Brainard, who has been quiet recently. She noted that at some point in the tightening cycle, the risks will become more two sided, a slightly less hawkish comment post that last FOMC minutes. She continued to state that monetary policy will need to be restricted for some time to provide confidence and inflation is moving down, and that the path of policy will be data dependent in Europe where the ECB out on Friday. The meeting was in line with expectations as the bank raised the deposit facility rate by 75 basis points to 1.25% of the meeting was clearly hawkish with regard outlining that there are more hikes to come over the next few meetings with the intent to dampen demand and protect against the persistent upward trend and inflation expectations. They also reiterated that there will be data dependent and act on a meeting by meeting approach moving to the UK last week, Liz trust became the United Kingdom’s new prime minister replacing Boris Johnson who resigned in July, she has a difficult task ahead, and the current energy crisis is front and center trust announced an estimated 150 billion pound energy package aimed at trying to cap rising energy prices. The intervention involves an energy price guarantee, whereby the price paid to the energy supplier is kept, and the government will subsidize the lost revenue. The policy was largely aimed at households who have been given two years of energy price guarantees. This is in contrast to businesses who have only been given six months. The policy avoids the potential windfall tax path that was tabled, it will reduce the stress on household budgets, and it will provide inflationary relief for energy bills. Closer to home with the RBA. Out on Tuesday, it was a relatively uneventful and the bank hike their cash rate by 50 basis points in line with consensus to 2.35%. They noted that they expect inflation to increase further over the coming months, and forecasts inflation of 7.75% for 2022 through 2023 and 2024. It is then expected that inflation will moderate down to the target range. We also had the quarter and quarter GDP growth numbers out on Wednesday, with the economy growing by 0.9% in q2. This was slightly ahead of market expectations and the first full quarter since the board has reopened. Turning to equity news, the latest technology company to receive a takeover offer was Tyro payments. They announced on Thursday that they had received a bid from a consortium led by potential capital and on the back of this the share price rallied 28% to $1.26. The bid was at $1.27 a 30% premium and valued the company at approximately $660 million. Tyra rejected the bed on the basis that it was undervaluing the company. And the board announced that it was not in the best interest for the shareholders to accept. One issue for Tyro is that a major shareholder Mike cannon Brooks with a 12.5% stake has put the takeover offer in play after giving a support to the consortiums bird has one provision was they would abandon the offer of Tara was to get a bid from another party that was 25 cents higher. nuix was another company rumored to have received a takeover offer late in the week. The stock price rallied 20% On Friday morning before going into a trading halt pending a further announcement. The company issued a press release addressing the speculation and noted that they had not received a bid from the US software intelligence company reveal. Lastly, MIT cash had the AGM last week and the update was better than expected. Both the liquor and hardware segments performed strongly and food didn’t slow as fast as expected. Looking forward to the week ahead. In the UK, we have the July GDP numbers out today. Expectations are for a strong improvement month or month with the growth of 0.4% up from negative 0.6% in June. Another key piece of data to watch will be the August inflation print out on Wednesday. Consensus is flat month a month at 0.6% and 10.2% year on year. We also have the inflation numbers out for the US on Wednesday. And important print for the Fed to watch and expectations are for a slight decrease month a month to negative 0.1% for August and 8.1% year on year. Moving closer to home. On Thursday we have the employment numbers out in Australia. Expectations for the employment rate to stay flat at 3.4 per sent in for employment change to increase by 50,000 compared to the negative 40.9 1000 in July remember the employment change data refers to the absolute change in the number of workers in Australia thanks for listening we’ll see you next week.