Stock market selloff returns from holiday

New Zealand shares fell in broad-based selling as the tech rout on Wall Street returned after the Labor Day holiday in the United States.

Wednesday, September 9th 2020, 6:52PM

by BusinessDesk

The S&P/NZX 50 Index dropped 156 points, or 1.3 percent, to 11,739.11. Within the index, 36 stocks fell, seven rose and seven were unchanged. Turnover was $161.8 million.

The correction in US tech stocks, that began last Thursday, continued overnight when US markets reopened after Labor Day and carried through to the local market.

“It is hard to know what the cause was other than the market getting a bit overheated and unwinding pretty quickly as they have a tendency to do,” said Brad Gordon, an investment adviser at Hobson Wealth Partners.

The Nasdaq ran up to an all-time high before the selloff, which Gordon said may have been driven in part by Japanese investment firm Softbank's "big whale trade" as it spent billions on US tech stocks.

“The Nasdaq futures are up quite strongly so we are expecting a bit of a bounce,” he said.

Two local technology stocks with exposure to the US market took heavy losses today: Vista Group International fell 2.6 percent to $1.85 while Pushpay Holdings dropped 2.8 percent to $7.54.

Napier Port Holdings posted the day’s biggest fall, down 4.1 percent at $3.49 on a light volume of just 38,000 shares.

The index’s heavyweight stocks both declined. A2 Milk Co fell 2.4 percent to $17.84 and Fisher & Paykel Healthcare was down 0.6 percent at $33.60.

Travel stocks fell with Tourism Holdings declining 3.8 percent to $2.03, Auckland International Airport falling 1.3 percent to $7.01 and Air New Zealand down 0.4 percent at $1.34.

Even the ascendant travel booking company Serko, which is entering the index on Sept. 21, fell 0.9 percent to $4.30.

Investore Property was one of just seven stocks to gain, up 0.5 percent at $2.24 after it announced its first-quarter dividend at today's annual meeting.

The property sector was generally defensive with only Vital Healthcare Property Trust declining 0.7 percent to $3.02.

Briscoe Group also held up well, thanks to yesterday's strong earnings report and increased dividend. The stock was unchanged at $3.84.

Sky Network Television continued to rally, gaining 3.1 percent to 16.6 cents. The pay-TV company is up 20 percent this week ahead of its earnings result tomorrow.

“Macquarie upgraded Sky TV two days ago, put a buy on it—which is probably the first buy on it in quite some time—that’s been the main driver of the rally,” Gordon said.

Sky’s low share price has attracted a lot of attention from retail investors who are often drawn to cheaper stocks. A number of NZX Facebook investor pages show lots of retail investors speculating the company's shares will surge tomorrow without any specific rational.

“With a lot of day traders in the market now, you do get these accentuated moves,” Gordon said. “Hopefully, it hasn’t run too hard into the result.”

The NZ dollar shifted lower as traders moved to haven currencies and the greenback ticked higher. The local currency dropped as low as 66.10 US cents overnight as the US equity selloff continued when investors returned from the long Labor Day weekend.

The kiwi dollar was trading 66.24 US cents at 5pm in Wellington, down from 66.83 cents yesterday.

The trade-weighted index was at 71.49 at 5pm, from 71.94 yesterday. The kiwi traded at 91.66 Australian cents from 91.81 cents, 70.14 yen from 71.01 yen, 56.23 euro cents from 56.58 cents, 51.08 British pence from 50.86 pence, and 4.5364 Chinese yuan from 4.5683 yuan.

Tags: Market Close