16 AUG 21 – Monday Market Highlights – Transcript

SUMMARY KEYWORDS

inflation, estimates, year, growth, market, week, milford, australian, oil, reported, data, lockdown, release, wage inflation, june, impacts, corn, closely followed, incentive, telstra

SPEAKERS

Fraser Jack, Roland Houghton

Fraser Jack 

You’re listening to the Monday market highlights brought to you by Milford.

Roland Houghton 

Good morning. It’s Monday the 16th of August, and I’m rolling from Milford oil had a volatile week falling 1% on Thursday night on the back of comments from the US asking OPEC to increase production. What’s interesting is you have major economies such as the US trying to wean themselves off oil, however still very reliant upon it is of course a political agenda here is high gas prices aren’t good for any sitting government hitting into victim elections. He’d like us CPI data came in at 0.5% month on month, or 0.3%. For core inflation, which excludes food and energy prices. These were largely in line with estimates and slowed slightly on the June growth rates. a data point to watch within the CPI release is rent inflation. Why this is important is that it has about a 32% waiting in the inflation calculation and hence has a lot of influence over both headline and core inflation. These are consistently ticking up and it may push inflation higher as some of the more transitory factors unwind, or less closely followed data release, at least in Australia was the US Department of Agriculture’s August world agriculture supply and demand estimates. These are pretty bullish for soft commodity prices, with corn production estimates reduced by 3% and ending stock estimates for corn also revised down by over 13%. It seems heightened food inflation may not be behind us just yet. Turning to equity news that you are supporting season has largely come to a close and it was a strong one with over 70% of companies beating on both sales and earnings per share. Either solid beats also companies exceeding earnings per share expectations by 16%. On average, domestically, Telstra reported their full year results which are roughly in line with market estimates. The standout was definitely the mobile division, which saw strong growth return in the second half of the year, which sets them up very well for a solid if by 22. And a return to full year growth for the first time in a while. Goodman group also reported their four year results coming in slightly at a consensus. The focus was on guidance, which was for 10% growth, which was below consensus estimates of about 14% growth. Now government are generally quite conservative, and so it’s very possible they’ll upgrade throughout the year. Interestingly, they’ve locked up a bunch of key execs for 10 years on a pretty fascinating long term incentive plan. They must achieve tip set APS growth per annum over the next five years to receive the incentive, which they invest over additional five years, so they’ve really locked up the key personnel Well, in the week ahead, the Reserve Bank of New Zealand will meet to decide whether or not to hike rates. The markets pricing in at least a 25 basis point increase it right however, is increasing speculation they might actually do 50 bibs instead, Australian quarterly wage inflation is out on Wednesday, with expectations of a 1.9% year on year rise in wages. In addition, the Australian employment numbers will also be released and it will be very interesting to see the lockdown impacts on the July print. The market expects an unemployment rate of 5% which compares to 4.9% achieved in June. Now this slight softening is unsurprising given the current lockdowns reporting season remains a key focus of ours and we will continue to look for evidence of inflationary pressures impacting business operations and profitability. Thanks for listening. We’ll see you next week.