Australian banking report spooks investors

New Zealand shares fell in relatively quiet trading, with investors keeping one eye across the Tasman for the findings of a royal commission into the banking sector and waiting for the domestic earnings season to start next week.

Monday, February 4th 2019, 6:35PM

by BusinessDesk

The S&P/NZX 50 index decreased 19.76 points, or 0.2 percent, to 8,979.41. Within the index, 30 stocks fell, 14 gained and six were unchanged. Turnover was $81.4 million and just five companies traded on volumes of more than one million shares

Trading was muted ahead of the final report by Australia’s Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. The investigation uncovered all manner of misdeeds in the sector and has been a millstone for ASX financial stocks for the past year at a time when a slowing Australian property market was stirring unease. The S&P/ASX 200 index was up 0.4 percent in afternoon trading.

Mark Lister, head of private wealth research at Craigs Investment Partners, said the uncertainty created by the banking report and upcoming earnings season kept trading subdued.

"People are in positions where they want to be positioned and want to wait and see who it all shakes out," he said.

The late release of the banking report means its impact on financial stocks won't really show up until the ASX opens tomorrow after people have had time to digest it, Lister said.

On the NZX today, dual-listed Australia & New Zealand Banking Group increased 0.6 percent to $26.30, Westpac Banking Corp gained 1.1 percent to $26.05, and AMP fell 3.4 percent to $2.30. Heartland Group, which recently carved out its Australian reverse mortgage division from under its licensed banking unit to avoid New Zealand prudential banking requirements, fell 0.7 percent to $1.36.

Fletcher Building decreased 0.6 percent to $4.93 on less than half its average three-monthly volume. ASX-listed building materials firm Boral issued a profit warning over extreme rainfall on Australia's east coast and delays to major government infrastructure projects. Fletcher last year noted a slowdown in Australian residential work when it downgraded its earnings outlook.

Kiwi Property Group was the most traded stock, with 3.6 million shares changing hands, compared to a 90-day average of 1.3 million. The stock was unchanged at $1.425.

Spark New Zealand fell 0.6 percent to $4 on a volume of 2.6 million shares. Trade Me was down 0.5 percent at $6.31 on a volume of 1.5 million.

Pushpay Holdings, which reports fourth-quarter sales on Thursday, fell 0.8 percent to $3.55 on a volume of 1.1 million shares, about three times its average volume.

Air New Zealand marked the biggest gain on the day, up 2.1 percent at $2.73 on a volume of 1 million. The national carrier dropped to a three-month low last week after downgrading its annual earnings outlook. It reports its first-half result at the end of the month.

Contact Energy is the first major NZX-listed company to report when it announces earnings next week. It decreased 0.2 percent to $6.03.

Rivals Mercury NZ rose 2 percent to $3.62, Meridian Energy fell 0.6 percent to $3.58 and Genesis Energy dropped 1.1 percent to $2.615.

Utilities software developer Gentrack Group posted the biggest decline for the day, down 2.7 percent at $5. Synlait Milk dropped 2 percent to $9, both on light volumes.

Vista Group International fell 1.3 percent to $3.95 on light volumes. It today renewed a deal with Viacom for the multinational to use Vista's Movio software platform.

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