DJ Global Equities Roundup: Market Talk

The latest Market Talks covering Equities. Published exclusively on Dow Jones Newswires throughout the day.

1830 ET - Australian consumer confidence rose 0.9% last week, the fourth consecutive week of small gains, according to ANZ Roy Morgan. Confidence increased in Sydney, Melbourne and regional South Australia. Sentiment around current financial conditions gained 2.2%, while future financial conditions softened 0.3%. Weekly inflation expectations remained at the pandemic high of 4.8%. ANZ Head of Australian Economics David Plank says people are optimistic but sentiment is still some way below its long-run average. With Sydney and Melbourne headed towards reopening in the next few weeks, confidence increased in both cities by 4.4% and 1.5% respectively. (james.glynn@wsj.com; @JamesGlynnWSJ)

1827 ET - Australia's service sector contracted for a third straight month as Covid-19 lockdowns continued to affect demand and activity in the sector. That said, a slight easing of restrictions in some areas enabled a slower contraction of business activity and saw employment levels return to growth in September. The IHS Markit Australia Services PMI business activity index rose to 45.5 in September from 42.9 in August. Price pressures remained steep for service providers while overall optimism softened from August. (james.glynn@wsj.com; @JamesGlynnWSJ)

1824 ET - New Zealand's NZX-50 drops 0.8% to 13234 in early trading following a weak lead from Wall Street. The prospect of pandemic restrictions continuing in Auckland, which will weigh on the economy, is also negative for sentiment. The government has conceded there's no hope of returning to zero Covid-19 cases, but will continue measures to slow its spread. Infrastructure investor Infratil is among the few gainers, up 0.9% after announcing a new data-center investment. Expectations for a RBNZ rate increase on Wednesday remain high in interest-rate markets, though have moderated. BNZ says OIS pricing implies an 80% probability of a 25 bps rate increase, which is the lowest in six weeks. (stephen.wright@wsj.com)

1800 ET - SeaLink Travel's failure to land the Melbourne Metro Bus Franchise is a relatively large deal to miss, given it would have boosted the company's FY 2023 EPS by 8%, UBS says. The A$2.3 billion contract, representing 30% of Melbourne's metro bus network, was awarded to rival Kinetic from a shortlist of four bidders. UBS retains a buy call on SeaLink, but trims its price target by 2.9% to A$10.20/share. The next catalyst is now likely to be the outcome of the tender process for the Sydney Region 9 bus contract. "We think at minimum either Sydney Region 9 or the MMBF needed to be won just to meet market pricing, hence the importance of winning Region 9 has just increased," UBS says. SeaLink ended Monday trading at A$8.30. (david.winning@wsj.com; @dwinningWSJ)

1756 ET - AGL Energy's planned separation of its retail business from its coal-fired power generation assets won't provide either with significant capacity for growth, UBS says. That's because both companies--AGL Australia and Accel Energy--will have constrained balance sheets. UBS now sees a lower risk that more equity will be needed before the demerger happens, as AGL has scrapped its special dividend and will underwrite its dividend reinvestment plan. However, the bank says its "refreshed credit analysis still does not expect either AGL Australia or Accel Energy to have balance sheet capacity to support any material growth investments following the demerger." (david.winning@wsj.com; @dwinningWSJ)

1730 ET - Maria Palma, general partner at London-based venture firm Kindred Capital, says the outage of major social-media communications platforms caused conversations with existing portfolio-company founders and discussions over a fast-moving new deal to stall. "We rely on WhatsApp for everything--founder chats, internal deals and team dialogue," she says via text message, adding, "It has been a huge disruption to have it down all day." She switched to email and other messaging services such as Signal and Telegram. Few people text in Europe, she finds. Julio Vasconcellos, managing partner at Brazil-based venture firm Atlantico, meanwhile, says his team had to adjust, too. "We had a fund discussion as to whether we should shift our internal communications to TikTok, but eventually figured we'd just stick to Slack, :-)," he says in an email. (yuliya.chernova@wsj.com)"ASX 200 Poised to Resume Slide at the Open -- Market Talk," at 2120 GMT, incorrectly said the ASX 200 rose 1.9% on Monday. It rose 1.3%. The correct version follows: 1720 ET - Australia's S&P/ASX 200 looks set to resume its recent slide at the open, following a weak lead from U.S. stocks. ASX futures are down by 0.9% ahead of a session that features the Reserve Bank's latest interest-rate decision. Futures suggest the ASX 200's week-opening 1.3% surge could be just a pause in a decline that has led to four consecutive weekly falls. The ASX 200 fell 2.1% last week. U.S. indices dropped on Monday amid a selloff of shares in Facebook and other big tech companies. The S&P 500 fell 1.3%, the Nasdaq Composite dropped 2.1%, and the Dow Jones Industrial Average slipped 0.9%. (stuart.condie@wsj.com; @StuartLCondie)

1723 ET - Covid-19 outbreaks in several of Australia's major cities are a tailwind for Healius's revenue as the pathology services specialist provides more PCR tests. Jefferies now expects around 143,000 tests will be performed each day in Australia between July and December, with Healius securing its historical market share. "In FY 2022, we now forecast Healius's pathology market revenue to increase by circa 15% on the prior corresponding period (from 8.3% previously)," Jefferies says. It also expects Healius's Ebitda margin to rise by 364 basis points to 31.2% compared with a year ago, due to increased Covid-19 testing. Still, it expects Covid-19 pathology testing to decline from FY23, given vaccination rates. (david.winning@wsj.com; @dwinningWSJ)

1720 ET - Southwest Airlines is joining peers in requiring employees to be vaccinated, citing President Biden's executive order for federal contractors. "We have no viable choice but to comply with the US government mandate for Employees to be vaccinated," CEO Gary Kelly tells employees in a video message reviewed by WSJ. That leaves Delta as the odd airline out. The carrier reiterates that it believes its approach is working, with 84% of Delta's employees now vaccinated. "Delta people who remain unvaccinated can continue their careers while undergoing mandatory masking, weekly testing and--beginning in November--assessment of a $200 healthcare surcharge," the carrier says. (alison.sider@wsj.com; @alyrose)

"ASX 200 Poised to Resume Slide at the Open -- Market Talk," at 2120 GMT, incorrectly said the ASX 200 rose 1.9% on Monday. It rose 1.3%. The correct version follows: 1720 ET - Australia's S&P/ASX 200 looks set to resume its recent slide at the open, following a weak lead from U.S. stocks. ASX futures are down by 0.9% ahead of a session that features the Reserve Bank's latest interest-rate decision. Futures suggest the ASX 200's week-opening 1.3% surge could be just a pause in a decline that has led to four consecutive weekly falls. The ASX 200 fell 2.1% last week. U.S. indices dropped on Monday amid a selloff of shares in Facebook and other big tech companies. The S&P 500 fell 1.3%, the Nasdaq Composite dropped 2.1%, and the Dow Jones Industrial Average slipped 0.9%. (stuart.condie@wsj.com; @StuartLCondie) Corrections & Amplifications

This item was corrected at 1731 ET because the original version incorrectly said the ASX 200 rose 1.9% on Monday. It rose 1.3%

1715 ET - Sonic Healthcare's Covid-19 testing volumes are higher than expected in 3Q, with Jefferies expecting a degree of durability in demand through at least the year end. In Australia, for example, 3Q Covid-19 testing volumes more than tripled compared with 2Q. Jefferies, which lifts Sonic to buy from hold, estimates that the percentage margin from Covid testing is at least 800 basis points higher than margins in its base business. "We acknowledge a near-to-medium Covid earnings increase, and also note that Sonic continues to generate cash," Jefferies says. "This raises the possibility of corporate activity over the medium term (not just in the US, given Sonic's global reach), which may be seen positively." (david.winning@wsj.com; @dwinningWSJ)

1652 ET - Canadian stocks close lower as the healthcare and information technology sectors tumble. The benchmark S&P/TSX Composite Index falls 0.5% to 20052 and the blue-chip S&P/TSX 60 Index slips 0.4% to 1203. In economic news, Canadian building permits fell 2.1% on a month-over-month basis in August, driven by a drop in residential construction plans in the provinces of Ontario and British Columbia. Hut 8 Mining jumps 3.5% after the company reported mining 264 bitcoin last month. Surge Energy rises 2.1% after the company said it acquired oil-producing assets in southeastern Saskatchewan, revised upward its 2021 production guidance and gave a forecast for oil-price-dependent free cash flow levels next year. (kimberly.chin@wsj.com; @mskimberlychin)

(END) Dow Jones Newswires

October 04, 2021 18:30 ET (22:30 GMT)

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