NZ shares buck global sell-off

New Zealand shares rose as renewed fears of further pandemic lockdowns in Europe pushed the kiwi dollar lower and improved the outlook for Fisher & Paykel Healthcare.

Tuesday, September 22nd 2020, 6:37PM

by BusinessDesk

The S&P/NZX 50 Index rose 70.12 points, or 0.6 percent, to 11,609.22. Within the index, 24 stocks rose, 21 fell and five were unchanged. Turnover was $145.6 million.

Global markets were weaker as concern grew climbing covid-19 cases in the United States and Europe may lead to tighter restrictions.

European bourses fell more than 3 percent, Wall Street dropped approximately 1.5 percent and Asian markets were down about half a percent.

“September is proving to be a month to forget for equity investors, with some markets nearing correction territory,” said ASB economist, Mark Smith, referring to a 10 percent decline from a peak.

The New Zealand dollar went along with the global sell-off, falling as low as 66.55 US cents following a flight to haven currencies such as the greenback and the Japanese yen.

The kiwi dollar was trading at 66.71 cents at 5pm in Wellington, from 67.71 cents yesterday, and dropped to 69.73 yen from 70.62 yen.

Still, the weaker currency helped the NZX 50 snap a three-day decline as the offshore cacophony of bad news provided a tailwind for NZ's biggest listed company.

“The US dollar has rallied a bit on the back of that, so that is beneficial for exporters, and the big driver for the market is Fisher & Paykel Healthcare representing such a large portion of the index,” said Sam Trethewey, a portfolio manager at Milford Asset Management.

The respirator manufacturer rose 4 percent to $32.42 as rising virus cases may extend the increased demand the company is experiencing, with the weaker kiwi dollar improving relative earnings.

Pushpay Holdings, another pandemic beneficiary earning US dollars, rose 2 percent to $7.75. The company today named Lorraine Witten as an independent director. She currently serves on the boards of Rakon and TIL Logistics Group.

SkyCity Entertainment Group gained 3.2 percent at $2.87 after physical distancing restrictions were lifted outside Auckland allowing its Hamilton and Queenstown casinos to resume full operations.

The energy sector also made gains, led by Trustpower which advanced 2.8 percent to $7.10. Contact Energy rose 1.9 percent to $6.39 and Mercury NZ advanced 1.5 percent to $4.84.

Sky Network Television posted the day’s biggest fall, dropping 5.2 percent to 14.6 cents.

Financial firms were weaker after being caught up in a sell-off of global banking stocks following reports some had allegedly moved as much as US$2 trillion in illicit funds.

Westpac Banking Corp fell 1.9 percent to $17.48, Australia & New Zealand Banking Group dropped 1.7 percent to $17.89 and Heartland Group Holdings slipped 0.8 percent to $1.26. None of these were named as being involved in handling suspicious money.

Across the Tasman, Reserve Bank of Australia deputy governor Guy Debelle said a lower exchange rate would “definitely be beneficial” for the economy, but said direct foreign exchange intervention may not be effective.

Pat Gilligan, a director at Forex, said the “jaw boning” was enough to push the Australian dollar a little lower. The kiwi jumped from 92.14 cents to be trading at 92.37 Australian cents at 5pm, although still down slightly from 92.45 cents yesterday.

The trade-weighted index was at 71.74 at 5pm, from 72.38, with the kiwi trading at 56.69 euro cents from 57.06 cents, 52.04 British pence from 52.26 pence, and 4.5263 Chinese yuan from 4.5756 yuan.

Tags: Market Close