Fears over global growth drive NZX, not the Budget

New Zealand shares fell in subdued trading as fears over global growth weighed on firms with international operations such as Tourism Holdings and Vista Group International.

Thursday, May 30th 2019, 5:54PM

by BusinessDesk

The S&P/NZX Index decreased 24.49 points, or 0.2 percent, to 10,071.98. Within the index, 28 stocks fell, 17 rose, and five were unchanged. Turnover was $94.5 million, with just three stocks trading on volumes of more than a million shares.

Stock markets across Asia were mixed after Wall Street set a negative tone as investors fret over whether US-China trade tensions will crimp global growth. China's Shanghai Composite was down 0.8 percent in afternoon trading, Australia's S&P/ASX 200 Index fell 0.9 percent, while South Korea's Kospi 200 Index rose 0.6 percent.

James Lindsay, a senior portfolio manager at Nikko Asset Management, said the weak leads from overseas markets last night weighed on the NZX today, as investors pondered whether an inversion of the yield curve - where 10-year US government debt has a lower yield than short-term notes - whether it pointed to a global slow down.

"Concerns and worries around the continuing trade war and retaliatory action back and forward created that weak offshore lead," he said.

New Zealand's Treasury acknowledged the trade tensions between the US and China in its budget forecasts as a threat to the domestic economy if the dispute slows growth in this country's major trading partners.

Firms with global exposure were among the hardest hit. Tourism Holdings, which is overhauling its North American business, led the market lower, down 5.1 percent at $3.90 on a volume of 358,000 shares, more than its 90-day average of 142,000, Cinema analytics software firm Vista dropped 3.2 percent to $5.78 on a smaller volume than usual of 99,000 shares.

National carrier Air New Zealand fell 2.1 percent to $2.58 on a volume of 1.5 million shares, more than its 1.1 million average, while courier firm Freightways, which is often seen as a bellwether stock for the domestic economy, fell 1 percent to $8.22 with 343,000 shares changing hands. more than its 149,000 average.

Fonterra Shareholders' Fund units fell 2.5 percent to a record low $3.94, while Fonterra Cooperative Group's shares, which can only be owned by its farmer-suppliers, fell 2.5 percent to $3.95. The dairy company today reported a sharp decline in milk collection in April due to the dry weather conditions. At today's close, Fonterra's market capitalisation was $6.37 billion.

Smaller rival Synlait Milk fell 2.1 percent to $9.15 and A2 Milk dropped 2.3 percent to $15.61.

Spark New Zealand was the most traded stock on a volume of 1.6 million shares, well short of its 5.6 million average. It increased by 0.1 percent to $3.76. Auckland International Airport was up 2.6 percent at $8.62, the day's biggest increase, on a volume of 1.3 million shares.

Mainfreight rose 2.5 percent to $38.47. The transport and logistics firm has been a strong advocate for the government to increase rail investment, which would let it focus on the more profitable 'final mile' of freight delivery. The government today injected another $1 billion into KiwiRail to upgrade tracks, rolling stock, and the interisland ferries.

Restaurant Brands New Zealand increased 0.1 percent to $9 after reporting a 1.6 percent lift in first-quarter sales, largely on the strength of its KFC brand.

Outside the benchmark index, ikeGPS rose 7.6 percent to 57 cents after the company narrowed its annual loss and said it anticipated a strong 2020 financial year.

Truscreen rose 1.5 percent to 14 cents after narrowing its annual loss, and said it will seek shareholder support for its growth strategy as it works towards profitability.

Vector's 2025 bond paying annual interest of 3.45 percent was the most traded debt security on a volume of almost 1.4 million notes. The bonds closed at a yield of 3.1 percent, down 3 basis points. Vector's shares dropped 2.4 percent to $3.64.

Tags: Market Close