3 APR 2023 – Monday Market Highlights – Transcript

Nick Morgan
Good morning, it’s Monday the 3rd of April and im Nick from Milford. Looking at the key economic news from last week:

Starting in the US, the Core PCE index was released for the month of February, slowing more than expected to 0.3% m/m compared to expectations of 0.4% and down from 0.5% in January. Remember, the PCE index is the feds preferred measure of inflation.
We also had the University of Michigan consumer sentiment survey final print for March. This was revised down to 62 compared to expectations of 63.3 and from a preliminary reading of 67. This was the first decline in sentiment in 4 months and was led by a weakening in one-year business conditions as consumers are becoming increasingly concerned of a recession. 1 year inflation expectations were revised lower to 3.6% from 3.8% in the preliminary and the 5-year outlook was revised up to 2.9% from 2.8%.
Finally in the US we had personal spending and income numbers out for February. Spending was up 0.2% m/m slightly below market expectations of 0.3%. Income rose 0.3% m/m, slightly ahead of expectations of 0.2%.
We had Eurozone CPI out on Friday with y/y inflation easing to 6.9%, slightly below consensus of 7.1%. However the key focus will be on the core reading that continued to increase m/m to 5.7%, in line with consensus and up from 5.6% last month. With core inflation still rising policy makers in the EU with have pressure to continue hiking rates.
Moving to NZ, the ANZ consumer confidence index fell to 77.7 in March, down from 79.8 last month. The number of people who believe it’s a good time to buy a major household item increased slightly but remain at very low levels and inflation expectations increased to 5.4% from 5.3% previously, the highest read in 9 months. This will continue to put pressure on the RBNZ to raise rates.

Finally in Australia we had preliminary retail sale numbers out for February rising 0.2% m/m ahead of expectations of 0.1%, but still down from last months 1.8%, showing a levelling of retail spending. We also had the monthly CPI indicator come in at 6.8% for February, easing from 7.4% last month and below consensus of 7.1%.
Turning to Equity news

Early in week First Citizen bank agreed to buy $72b of SVB assets at a discount of 16.5b. Leaving approximately 90b worth of assets in receivership for disposition by the Federal Deposit Insurance Corporation.

Last week we also had Albemarle submit a non-binding proposal to acquire 100% of Liontown Resources, a pre production lithium company with a large spodumene deposit in western Ausrralia. The $2.50 was rejected by the board as they believe it substantially undervalued the company.

United Malt Group received a non-binding proposal from French company Malteries Soufflet to acquire all outstanding shares at $5 per share. UMG has granted a period of exclusive due diligence and If french group provides a binding proposal for no less than the initial 5$ per share bid, UMG’s Board intends to unanimously recommend shareholder vote in favour.

Infratil held there annual investor on Tuesday with no large surprises. They did talk to the renewable energy pipeline being a key driver of optionality in the portfolio and that the US Inflation Reduction provides additional tailwinds in the space.
Looking at the weak ahead

In the US we have ISM manufacturing print out on Tuesday and the non-manufacturing print on Thursday.
US non farm payrolls and employment data out on Saturday, both key data points that the fed will be watching closely. Expectations are for non farm payrolls to drop to 238k for March, down from 311k in Feb.
In Australia we have the RBA interest rate decision on Tuesday, with expectations for a 25bps hike, followed by Governor Lowe speaking on Wednesday,
Finally we have the interest rate decision for NZ on Wednesday, with the market pricing in 25bps bring the OCR to 5%.

Thanks for listing we will see you next week.