Uncertainty Pushes Markets Lower

December 09, 2022

Good Morning,

US Equities move down ahead of the Fed policy meeting next week, which had a flow-on effect on markets globally. People rejoice after China's zero-covid policy overhaul. Markets are rattled following comments made by top executives at Goldman Sachs, JPMorgan and Bank of America.

Let's jump in.

Before The Bell

Markets

  • The NZX 50 inches +0.1% higher to 11,617.14. The ASX 200 (-0.7%) slipped to a two-week low with banks, materials and energy sectors performing the worst amid renewed US recession fears. US indices fell (Nasdaq down -0.5%) with fears that the US central bank may stick to a longer rate-hike cycle being intensified by recent positive economic news regarding jobs and service sector reports.

Earnings and Data

  • Stats NZ: Business Employment and Financial Data: September 2022 releases today.

  • Fonterra’s first-quarter profit jumped 84% as it benefits from strong margins in its protein and cheese products. The country’s largest dairy processor said normalised after-tax profit increased to $214 million in the three months to October 31, from $116m last year. Sales rose 32% to $5.79 billion. (Stuff)

News Summary

Subcontractors will get their full $2.89 million in retention payments from liquidated Wellington company Armstrong Downes Commercial, and a further $500,000 will be paid to unsecured creditors by Christmas. (Stuff)

New Zealand’s richest man, billionaire Graeme Hart, was behind the biggest single donation to Auckland mayor Wayne Brown’s winning $470,000 election campaign. (Stuff)

National says new parents should be able to take parental leave at the same time, so both have a chance to form a close bond with their babies. (Stuff)

Air New Zealand expects to see a big bump to its six-month profits as Kiwis start to fly again, with a fall in jet fuel prices cutting one of its major costs. First-half profit before tax and other significant items are expected to be in a range of $295 million to $325m, the airline said on Thursday. (Stuff)

Russia freed WNBA star Brittney Griner on Thursday (local time) in a dramatic high-level prisoner exchange, with the US releasing notorious Russian arms dealer Viktor Bout, American officials said. (Stuff)

Iran has said it executed a prisoner over his conviction for a crime allegedly committed during the country's ongoing nationwide protests, the first such death penalty carried out by Tehran. (Stuff)

Healius chief executive Malcolm Parmenter is poised to step down from the pathology and imaging group next year with chief financial and operating officer Maxine Jaquet the front-runner to take over. (AFR)

Mining giant Glencore has partly blamed the Palaszczuk government’s new controversial royalties scheme for its decision to abandon its plans to build a $2 billion thermal coal mine in Central Queensland. (AFR)

Papua New Guinea’s upcoming $30 billion plunge into LNG expansion will not come at the expense of the vast renewable energy and hydrogen opportunities in the country, says Petroleum Minister Kerenga Kua. (AFR)

Markets have been rattled by downbeat comments from top executives at Goldman Sachs Group Inc (GS.N), JPMorgan Chase & Co (JPM.N) and Bank of America Corp (BAC.N) on Tuesday that a mild to more pronounced recession was likely ahead. (Reuters)

Deal Flow

Investments/ M&A

  • Buyout firm Potentia Capital has hit back in the battle for ASX-listed Nitro Software, increasing its offer to $2 a share and saying it could go higher following a look at the company’s books. (AFR)

  • QIC’s infrastructure team is understood to be in the final stages of signing a $140 million odd deal to buy Healius’s day hospitals that were put on the auction block via Gresham Partners. (AFR)

  • Deutsche Bank AG’s asset management arm DWS Group is considering a sale of its private equity secondary business as part of a plan to pull back from areas where it doesn’t have sufficient scale. (BBG)

  • Assicurazioni Generali SpA is planning to sell a roughly €20 billion ($21 billion) Italian life insurance portfolio as part of a plan to improve profitability, people familiar with the matter said. (BBG)

  • MNG Airlines, a logistics and transport company, is going public through a merger with a blank-check company led by European dealmakers Makram Azar and Scott Freidheim. The deal with Golden Falcon Acquisition Corp. has an expected enterprise value of $676 million, according to a statement Wednesday. (BBG)

  • NRG Energy Inc. agreed to buy Vivint Smart Home Inc. for $2.8 billion to accelerate the US power producer’s strategy of diversifying from its core electricity-generation business by focusing on retail consumers. (BBG)

VC & Fundraising

  • Gas producer and explorer Denison Gas are stepping up its pursuit of a home on the ASX boards, chasing investors that can fund it through to its slated initial public offering next year. It is understood Denison Gas has kicked off a $40 million pre-IPO raising, targeting institutional investors and family office types that could tip in the capital now and anchor its register at the time of its float. (AFR)

Equity Raises

  • Saudi Refiner Luberef Set to Price $1.3 Billion IPO at Top End (BBG)

  • Thoma Bravo LLC raised $32.4 billion for three new tech-focused funds in one of the biggest hauls by a private-equity firm this year even as some rivals struggle to close out funding rounds. (BBG)

Debt 

  • Higher debt servicing costs will add $80 a week to the “average” household budget by the end of next year, ASB economists say, and an extra $100 by the end of 2024. (Stuff)

  • Apollo Global Management Inc. and Franklin Templeton are among investors that bought $750 million of debt backing the buyout of Citrix Systems Inc., helping Wall Street banks chip away at billions of dollars in risky loans clogging their balance sheets. (BBG)

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