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August 13 2021

 
 
1. Life in lockdown…

As we approach the end of our second month in lockdown in Sydney, the impacts are starting to show on consumer sentiment, business conditions and reported hiring.

Source: NAB, Macquarie Macro Strategy

2. Result round up…

We are still in the midst of Australia’s reporting season, but some interesting results we have seen this week are:

  • Chart 1/2: the Transurban result showed Sydney traffic has been smashed by lockdown, and Melbourne never really recovered from the Covid impacts.
  • Chart 3: James Hardie announced a record result for the June quarter, with volume, revenue and margins well ahead of estimates. Industry sources are also noting that capacity constraints will likely mean that the cycle peak keeps getting pushed out.
  • Chart 4: the QBE result reiterated the strong pricing environment for insurers currently, as their underwriting margin hit a 5 year high.

Source: Transurban company release

James Hardie price and volume growth

Source: James Hardie company release

Source: QBE company release, Firetrail

 

3. Demand and supply…

Global road traffic has remained stable despite the increasing prevalence of the Covid Delta variant, as our discussions with industry contacts suggest the Delta variant is impacting emerging markets rather than developed markets. As a reminder, road traffic makes up over half of global oil demand (chemicals account for about 30%), but US oil companies are reinvesting at the lowest rate in at least a decade.

Source: Rystad Energy research