Healthcare stocks lead market higher

The healthcare sector led a broad rally on the New Zealand share market, mirroring a similar trend in United States indices on Wednesday night

Thursday, October 1st 2020, 5:56PM

by BusinessDesk

The S&P/NZX 50 Index rose 65.45 points, or 0.6 percent, to 11,812.73. Within the index, 30 stocks rose, 10 fell and 10 were unchanged. Turnover was $199.9 million.

Wall Street equity indices each gained approximately 1 percent after federal government leaders indicated progress was being made on negotiations for a new pandemic relief package.

The healthcare sector had the largest percentage gain lending momentum to the NZX’s biggest company, Fisher & Paykel Healthcare, which gathers half its revenue in the US.

The stock rose 2.3 percent to $34.04 with 1.4 million shares traded.

“That US lead into our market today is driven by some good economic numbers and potential for that stimulus bill to be passed,” said Peter McIntyre, an investment adviser at Craigs Investment Partners.

Retirement village operators tangentially exposed to the health sector also gained. Oceania Healthcare led the market higher, up 3.5 percent at $1.18 and Ryman Healthcare rose 1.7 percent to $14.32.

Ryman’s gains were supported by covid numbers falling in Australia, and Oceania giving investors a confidence boost by putting a debt issue in the market, McIntyre said.

Online travel expense management company Serko is in a trading halt at $4.51 while it completes the bookbuild for an unexpected $55 million equity raising.

“It’s uncertain times and I presume they are making sure they are in a strong financial position to benefit from any upswing in travel over the next two to three years,” McIntyre said.

Air New Zealand rose 1.5 percent to $1.39 and Auckland International Airport advanced 0.6 percent to $7.33.

A2 Milk Company fell a further 1 percent to $15.19 as it continued its decline after downgrading its revenue forecast but appeared to be stabilising, McIntyre said.

“If they hit their second half numbers, which is what the market is questioning, then you’ll see the stock rally,” he said.

Meridian Energy fell 1 percent to $4.90 after its annual general meeting this morning, but had made strong gains since the Labour Party announced it would negotiate an extension for the Tiwai Point aluminium smelter.

The company’s chief executive said four years remained the firm’s preferred term for an extension, as it would provide sufficient time to develop plans with new customers and for them to consent any new activities.

Forsyth Barr Research analyst Guy Hooper today rated fishing group Sanford an 'outperform' and said current pricing almost reflected the book value of quota and licences alone at $5.21 a share. The stock climbed 0.2 percent to $5.69, but well below Hooper's estimate of value at around $8.37 a share.

The robust overnight equity trading on Wall Street was reflected in currency markets, where investors found enough confidence in the prospect of an economic recovery to seek out higher risk currencies such as the New Zealand dollar.

The kiwi dollar rose throughout the session and was trading at 66.27 US cents at 5pm in Wellington, up from 65.87 cents yesterday.

“NZD/USD continues to oscillate inside an ascending and broadening range,” said Westpac senior market strategist, Imre Speizer. “The recent equity market correction may be complete, in which case a test of 0.6700 is on the cards near term.”

The trade-weighted index was at 71.45 at 5pm, from 71.26 yesterday. The kiwi traded at 92.34 Australian cents from 92.57 cents, 69.89 yen from 69.55 yen, 56.43 euro cents from 56.14 cents, 51.23 British pence from 51.30 pence, and 4.4996 Chinese yuan from 4.4867 yuan.

Tags: Market Close