Kiwi falls on economic concern

The New Zealand dollar sank to its lowest level since late August as the greenback continued to attract buying amid a sustained equity sell-off on recessionary fears.

Thursday, September 24th 2020, 6:50PM

by BusinessDesk

Mike Shirley, a senior trader at Kiwibank, said the day’s broad negativity had been kicked off by reports Congress may go into recess as early as this week to campaign in the run up to the November election.

“That would put the kybosh on any fiscal stimulus getting through in the near-term,” he said.

The kiwi dollar was trading 65.29 US cents at 5pm in Wellington — its lowest level since August — down from 66.11 cents yesterday.

The trade-weighted index was at 70.90 at 5pm, from 71.45 yesterday. The kiwi traded at 92.69 Australian cents from 92.73, 68.84 yen from 69.46 yen, 56.02 euro cents from 56.59 cents, 51.40 British pence from 51.97 pence, and 4.4519 Chinese yuan from 4.4915 yuan.

The kiwi dollar has been in decline against the greenback since Monday as growing anxiety about the global economy has driven a “flight to safety” as investors sold out of equities, Shirley said.

The S&P 500 sank more than 2 percent in the US on Wednesday, as investors worried the chance of Congress approving any new fiscal stimulus seem to be slipping away at a time when global virus numbers are still rising.

“Fading prospects for US fiscal stimulus and the stepping up of mobility restrictions on concerns about the second wave of covid-19 are smacking global stock markets again,” said Stephen Innes, chief global markets strategist at Axicorp in a note.

The NZ share market saw a similar sell-off as investors followed the lead from Wall Street, with broad based selling across the majority of the S&P/ NZX 50 Index.

The NZX 50 fell 14.73 points, or 0.1 percent, to 11,689.89. Within the index, 26 stocks fell, 15 rose and nine were unchanged. Turnover was $154.6 million.

Chorus led the market lower, falling 2.6 percent to $8.36, followed by Vista Group International which declined 2.3 percent to $1.71.

Ebos Group fell 1.9 percent to $23.65, after shedding rights to a 40 cent dividend.

Westpac Banking Corp fell 0.5 percent to $17.47 after it agreed to pay a billion dollar plus civil penalty in Australia for breaching money laundering law there. Meanwhile, Australia & New Zealand Banking Group rose 0.7 percent to $18.16.

Pushpay Holdings had a second day of gains after getting a broker upgrade from research firm Jarden, it rose 4.2 percent to $8.54.

Kathmandu Holdings got a small bounce after it was sold down following its annual result yesterday, climbing 0.8 percent to $1.22 today.

Serko found some support, gaining 3.6 percent at $4.57, after losing almost all of its index bounce across the first four sessions trading on the NZX 50.

Restaurant Brands posted the day’s biggest gain, rising 4.6 percent to $12.30 on very light volume.

Tags: Market Close