The latest Market Talks covering Equities. Published exclusively on Dow Jones Newswires throughout the day.
1754 ET - David Jones turning insolvent has cost mall owner Scentre a bull. Morgan Stanley downgrades Scentre to equal-weight, from overweight, citing concerns that investors will lower earnings estimates on the uncertain outlook for one of its biggest tenants. "We think consensus is too high for Scentre," analyst Simon Chan, pointing to EPS forecasts of 25.1 Australian cents in 2027. It expects Scentre will be able to reuse any area vacated by David Jones. MS notes Scentre has a very strong record in dealing with department stores requiring less floor space. "However, until we get some certainty around the timing, and plans for any potential vacancy, the market may hold a conservative view on the stock," MS says. Its price target falls 9.9% to A$4.00/share. Scentre ended last week at A$3.61. (david.winning@wsj.com; @dwinningWSJ)
1744 ET - Morgans downgrades Qantas Airways to hold, from accumulate, as fuel costs creep higher against a backdrop of ongoing Middle East tensions. Qantas's 1H fuel bill is set to swell to A$3.75 billion. Still, Qantas says travel demand remains resilient. Analyst Chris Creech is positive on the quality of Qantas's business, pointing to its fleet-renewal program that should help to drive earnings growth over time. "However, elevated fuel prices, higher operating costs and broader inflationary pressures continue to weigh on near-term earnings, with FY27 underlying pretax profit expected to decline materially (-21%) on prior forecasts before earnings growth resumes from FY28 onwards," Morgans says. It views FY27 as a transition year for Qantas, which ended last week at A$9.45. (david.winning@wsj.com; @dwinningWSJ)
1718 ET - Australian stocks look set to edge higher at the start of the new trading week. ASX futures are up by 0.2% ahead of Monday's open, suggesting the S&P/ASX 200 will continue its strong recent momentum. The benchmark index is up by 2.6% over the past two weeks, with market pricing suggesting that most traders think the Reserve Bank of Australia has finished raising interest rates. Ahead of the open, ANZ reported a 10% rise in annual profit and increased provisions against potential bad debts. Dyno Nobel returned to annual profit and said it expects a further increase in earnings from its explosives business in the year ahead. (stuart.condie@wsj.com)
1644 ET - New Zealand-based retailer Briscoe's latest update offers encouraging signals about underlying trading momentum, says Macquarie. Near-term earnings conversion remains the key challenge. Briscoe reported a 2% rise in 3Q sales to NZ$174.4 million. That was faster than the 0.3% growth achieved in 2Q. Briscoe now expects FY27 net profit of up to NZ$55 million. "We lower FY27 forecasts to reflect this guidance and reduce FY28 earnings to capture a slower recovery as operating headwinds persist, and transformation benefits take time to emerge," Macquarie says. Its FY27-29 EPS forecasts fall 4-9%. Macquarie retains a neutral call on Briscoe, and trims its price target by 4.3% to NZ$4.50/share. Briscoe is at NZ$4.26 early today. (david.winning@wsj.com; @dwinningWSJ)
1608 ET - New Zealand's benchmark NZX-50 index falls 0.5% to 13931.39 soon after opening as investors adjust to political uncertainty after Saturday's election had no clear winner. The ruling National Party and its right-wing allies had 67 seats after 100% of the election-day vote was counted. But hundreds of thousands of so-called special votes still must be counted. In past elections, these have reduced National's seat count. PM Luxon and opposition leader Hipkins both said the election was too close to call. Coalition talks with minor parties may be needed to decide the next government. Tourism Holdings and Air New Zealand lead early rises, up 2.1% and 1.3%, respectively. Ryman Healthcare falls 2.2% and Fisher & Paykel Healthcare drops 1.7%.
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