NZ Inflation Falls

April 21, 2023

Good Morning,

A drop in the rate of inflation is likely to mean the official cash rate (OCR) is near its peak, but economists expect there could be one more increase to come, SpaceX's next-generation Starship spacecraft exploded minutes after liftoff in an uncrewed test flight from South Texas, Bed Bath & Beyond Inc is preparing to file for bankruptcy as early as this weekend, U.S. House Speaker Kevin McCarthy has begun working in earnest to persuade his fellow Republicans to support a $1.5 trillion increase in the nation's debt ceiling.

Let's jump in.

Before The Bell

Markets

  • The UK's FTSE 100 index closed slightly up on Thursday as a jump in shares of consumer conglomerate Melrose offered just enough of a boost to overshadow falls in commodity-linked sectors (RT)

  • European shares edged lower on Thursday following a mixed bag of earnings on Wall Street, while investors awaited more economic data from the euro zone and corporate results to assess the strength of the region. The pan-European STOXX 600 index was down 0.2%, with utilities and automobile shares dragging the index, falling 1.2% and 2.1%, respectively (RT)

  • The S&P 500 edged lower on Thursday after disappointing quarterly reports from companies including Tesla and AT&T, while a drop in bond yields helped mitigate equity declines as investors sought clarity on the path of interest rates (RT)

  • Asian stocks ended Thursday's session on a lackluster note, as investors digested another set of mixed earnings reports from big U.S. companies and sought clarity on whether the Federal Reserve will pause after a widely expected 25-basis point rate hike in May (RT)

  • Brent crude futures were down $1.98, or 2.4%, to trade at $81.14 a barrel at 12:56 p.m. EDT (1656). West Texas Intermediate crude (WTI) futures dropped $2.05, or 2.6%, to $77.11 a barrel (RT)

Earnings and Data

  • U.S. wireless carrier AT&T Inc (T.N) missed market estimates for first-quarter revenue and free cash flow, underscoring the toll from strained consumer wallets and sparking a selloff in the telecoms sector on Thursday (RT)

  • Alaska Air Group (ALK.N) on Thursday reported a bigger-than-expected quarterly loss as higher expenses related to labor and fuel dented the carrier's margins (RT)

  • IBM Corp (IBM.N) beat Wall Street expectations for first-quarter profit on Wednesday and signaled demand for IT services was better than feared, sending shares up 3.5% after the bell (RT)

  • Bed Bath & Beyond Inc (BBBY.O) is preparing to file for bankruptcy as early as this weekend, the Wall Street Journal reported on Wednesday, citing people familiar with the matter. Shares of the company tumbled nearly 23% to 38 cents in after hours trading. They are down about 86% since the company said in January that it was exploring options including bankruptcy (RT)

  • A drop in the rate of inflation is likely to mean the official cash rate (OCR) is near its peak, but economists expect there could be one more increase to come. Inflation at 6.7% in the three months to March was significantly lower than the market, and Reserve Bank, predicted (Stuff)

  • Company failures for the three months ended March climbed to their highest level since 2020, according to data from the Restructuring, Insolvency and Turnaround Association (RITANZ) (NBR)

  • The sun might be setting on record bank profits, with KPMG’s latest pulse showing a levelling off in the December quarter. Its Financial Institutions Performance Survey concluded it was a solid 2022 for the sector, with net profit of $1.77 billion in the year's final three months, unchanged from the previous quarter. The survey also found a $159 million increase in net interest income, which was driven by a 0.6% increase in gross loans and advances, with an increase in net interest margins (NBR)

News Summary

  • Iran's navy forced a U.S. submarine to surface as it entered the Gulf, Iranian navy commander Shahram Irani told state television on Thursday, but the United States Navy's Fifth Fleet denied such an incident had taken place (RT)

  • U.S. House Speaker Kevin McCarthy has begun working in earnest to persuade his fellow Republicans to support a $1.5 trillion increase in the nation's debt ceiling, amid early indications of a possible revolt in his thin majority (RT)

  • At least 78 people were killed in a stampede in the Yemeni capital Sanaa as residents gathered at a school to receive cash donations distributed by merchants during Ramadan, witnesses and the Houthi administration said on Thursday (RT)

  • SpaceX's next-generation Starship spacecraft exploded minutes after liftoff in an uncrewed test flight from South Texas on Thursday, cutting short a key step in Elon Musk's development of a rocket vessel to eventually take humans to the moon and Mars (RT)

  • China's Huawei Technologies (HWT.UL) said on Thursday it is replacing internal software management systems it once sourced from U.S. vendors with its own in-house version, hailing it as a victory over U.S. curbs that once threatened its survival (RT)

  • Credit Suisse (CSGN.S) was accused on Thursday of having "learnt nothing" from the 2008 financial crisis on the first day of a trial at London's High Court over residential mortgage-backed securities (RT)

  • A Kenyan judge ruled on Thursday that Facebook's parent company Meta (META.O) could be sued in Kenya, after 43 moderators at its Nairobi hub last month filed a lawsuit against the group and its local partner Sama for unfair termination (RT)

  • Amazon.com Inc (AMZN.O) must face a proposed U.S. nationwide class action accusing the company of illegally monitoring private Facebook groups that delivery drivers used to discuss working conditions, a U.S. appeals court said on Wednesday (RT)

  • Former children’s entertainer Matthew Clayton appeared before Porirua District Court after pleading guilty to three charges of indecent acts on a child (Stuff)

  • A large construction firm that recently had 350 vehicles and pieces of equipment sold-off in a single auction had failed to pay GST and income tax for six years, the company’s administrator says (Stuff)

  • Te Ara Ahunga Ora Retirement Commission surveyed more than 300 organisations about the use of a total remuneration approach to KiwiSaver, finding that 45% used the model for at least some employees (Stuff)

  • A rise in the number of safety incidents at Port Nelson is a “huge disappointment”, the port’s chief executive says (Stuff)

  • A flash in the sky over the Ukrainian capital prompted confusion and alarm as city authorities said it was caused by a Nasa satellite reentering the atmosphere, while the US space agency denied involvement (Guardian)

Deal Flow

Investments / M&A

  • IKEA stores owner Ingka Group will spend 2 billion euros ($2.2 billion) expanding in the United States over the next three years, its biggest investment in a single country, in a bet to win American customers as other big-box retailers close stores (RT)

  • Britain's competition regulator said on Tuesday it has launched a "Phase 1" probe into Amazon.com Inc's (AMZN.O) planned $1.7 billion acquisition of iRobot Corp (IRBT.O), which makes the Roomba vacuum cleaner (RT)

  • Black Mountain Seeks Buyers for $300 Million Battery Power Unit (BBG)

  • Goldman Sachs Group Inc.’s Urban Investment Group teamed up with the Michaels Organization and the Community Development Trust to buy a $1.15 billion portfolio of 90 affordable housing complexes (BBG)

  • Manchester United Fans Enter Squeaky Bid Time (BBG)

  • Suitors line up for Downer’s Repurpose It, but Cleanaway bins bid (AFR)

  • Listed metal recycling group Sims Limited has hired Deloitte to run its mooted sell-down in biogas business LMS Energy, which analysts say could be worth some $400 million (AFR)

  • Elenium Automation is plotting a Nasdaq listing with help from a home-grown special purpose acquisition company in a deal that the Melbourne digital identification start-up hopes will boost its valuation by 54 per cent to $185 million (AFR)

  • Pacific Equity Partners’ schools and childcare centre supplies business Modern Star is close to acquiring family-owned Hart Sport, which was placed on the auction block by its owners last year via Deloitte (AFR)

VC & Fundraising

  • Sunnova Energy International Inc. rose as much as 14% after getting a conditional $3 billion partial loan guarantee from the US Department of Energy to provide solar to less wealthy American households and communities (BBG)

Equity Raises

  • Chinese liquor company ZJLD Group Inc. raised HK$5.3 billion ($675 million) in Hong Kong’s largest initial public offering this year, after pricing shares near the bottom of a marketed range, according to people familiar with the matter (BBG)

Debt

  • Canada Pension Plan Investment Board has priced a $1.25 billion five-year Kangaroo bond, in its third debt deal on the Australian shores (AFR)

Daily Picks

  • Amazon (AMZN.O) has launched its Anti-Counterfeiting Exchange (ACX), an initiative to help retail stores label and track marketplace counterfeits as part of the e-commerce giant's efforts to crack down on organized crime on its platform, the company announced on Thursday (RT)

  • Several hundred staff will lose their jobs at the University of Otago after falling student numbers means it needs to slash around $60 million from its budget (Stuff)

Job Board

New Zealand

  • ASB rural banking graduate - Apply here

  • Waterman Capital investment analyst - Apply here

Australia

  • Citadel Securities graduate and intern roles - Apply here

  • Goldman Sachs Investment Banking Intern - Apply here

  • IMC graduate and intern roles - Apply here

  • Jarden

    • Graduate role - Apply here

    • Summer internships - Apply here

  • Macquarie graduate roles - Apply here

  • Optiver

  • Graduate role - Apply here

  • Internships - Apply here

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