NZ shares fall as world waits on the Fed

New Zealand shares dipped, taking a lead from Wall Street as investors began taking profit on recent gains and before the US Federal Reserve makes its first economic forecasts since the pandemic struck.

Wednesday, June 10th 2020, 6:02PM

by BusinessDesk

The S&P/NZX 50 Index fell 38.17 points, or 0.3 percent, to 11,260.52. Within the index, 10 stocks rose, 31 fell, and nine were unchanged. Turnover was $188 million.

Wall Street’s upwards momentum subsided ahead of the Federal Reserve meeting. The Fed had shared a favourable outlook in December, when the coronavirus was largely unknown, but is now expected to paint a more dire picture at 6am NZT tomorrow.

Mark Lister, head of private wealth research at Craigs Investment Partners, said the meeting of the world’s biggest central bank was likely to have a neutral impact on equity markets

“The Fed is already throwing the kitchen sink at the issues,” he said. “It is hard to see them doing a whole lot more than they already are, but still people will be analysing every word and phrase.”

Share markets, fuelled by near-zero interest rates and massive government stimulus packages, have been steadily climbing in recent days but came off the boil overnight.

“I think it is nothing more scientific than we’ve had an outstanding run and it had to turn around at some point,” Lister said.

The S&P 500 fell 0.8 percent and the Dow Jones Industrial Average 1.1 percent. The Nasdaq climbed a further 0.3 percent after hitting a record the day before.

Asian markets were mixed, Australia’s S&P 200 rose 0.4 percent, Hong Kong’s Hang Seng was up 0.1 percent, but markets on mainland China fell half a percent and Japan’s Topix was down 0.2 percent.

The local benchmark started the week with a bang, jumping more than 3 percent on Monday and turning positive year to date. But it has walked back those gains and is now up just 1 percent this week.

Kathmandu, which leapt more than 11 percent on Monday, declined 4.4 percent to $1.31.

Vista Group International fell 4.7 percent to $1.82, New Zealand Refining Company dropped 4.2 percent to 91 cents, Air New Zealand fell 4.1 percent to $1.86 and SkyCity Entertainment Group declined 2.9 percent to $3.05.

Lister said stocks which had staged an “impressive rebound” were now seeing some profit taking.

Skellerup Holdings fell 4.7 percent to $2.02, leading the market lower but with just 43,000 shares traded.

Infratil dropped 4 percent to $4.97 after raising $250 million through an institutional placement priced at $4.76 per share to position the infrastructure investment firm to pursue its growth agenda and take advantage of any new opportunities.

Lister said there was likely an acquisition opportunity on the horizon.

“As a shareholder you don’t want that money just sitting there - you want them to be putting that capital to work,” he said.

Z Energy declined 1.3 percent to $3.11. Fuel volumes for the week ended June 7 fell 1 percent. The retailer said volume in the prior week had been elevated by a 10-cent discount offer going into the Queen's Birthday holiday weekend. Volumes for the week were down 30 percent compared to pre-lockdown levels.

Fletcher Building said it has negotiated easier covenants with its bankers through to the end of 2021 in case they become necessary as the company navigates through the coronavirus crisis. If it does call on the easier covenants, Fletcher has agreed to forego dividends until it returns to its normal covenants. Its share price edged 0.3 percent lower to $4.03.

Pushpay Holdings posted the day’s biggest gain, up 3.3 percent at $7.23. it was followed by logistics company Freightways which rose 2.7 percent to $7.30.

Tags: Market Close