Second market fall stopped by F&P Healthcare rebound

A share price bounce for Fisher & Paykel Healthcare helped inch the S&P/NZX 50 index higher today as a resurgence of covid-19 in the United States and Europe weighed on some stocks.

Wednesday, October 28th 2020, 10:05PM

by BusinessDesk

The benchmark index rose 12.61 points, or 0.1 percent, to 12,264.52. Within the index, 37 stocks fell, nine rose and four were unchanged. Turnover was $198.1 million.

Rising covid infections in the western world cast a dark cloud over global sentiment, as European nations reinstated some lockdown measures to stem the outbreak.

The US’s S&P 500 gained 0.3 percent after Tuesday’s 1.9 percent fall and the Euro Stoxx 600 index closed at its lowest level since May.

The NZ market joined the sell-off yesterday, falling almost 2 percent, but edged higher today due to the heavy weighting of the few stocks that have performed well during the covid-crisis.

Brad Gordon, an investment adviser at Hobson Wealth Partners, said the market moves today could be seen as a return of the ‘covid trade’ earlier in the year.

Medical device manufacturer F&P Healthcare jumped 3.9 percent to $35.96, coming back from a 3.5 percent fall yesterday. The company’s products are used in the treatment of covid and it has had elevated demand as hospitals around the world scaled up their ventilation capacity.

Today, ASX-listed competitor ResMed was up more than 4 percent ahead of its quarterly earnings update tomorrow, where analysts are predicting record revenue.

Infant formula exporter A2 Milk Company rose 0.6 percent to $15.21, its key market is China which has largely avoided significant second wave outbreaks.

The company has been another strong performer during the pandemic and together with F&P Healthcare makes up almost a third of the NZX 50.

Other dairy producers also made gains, Fonterra Shareholders’ Fund units were up 3.4 percent at $4.58 and Synlait Milk advanced 1 percent to $5.38.

Another pandemic beneficiary Pushpay Holdings, a tech platform facilitating online donations in US churches, climbed 1.6 percent to $9.35. The fintech stock was likely supported by a strong first-quarter result from distant cousin Afterpay on the ASX.

“Pushpay has a result next week, so there may be some pre-positioning for that as all the trends look pretty favourable,” Gordon said.

Despite the outperformances from these well-positioned stocks, the vast majority of shares on the NZX were weaker today.

Tourism Holdings posted the biggest drop, falling 5.8 percent to $2.29. The campervan rental company has operations in the United States and Europe, as well as its New Zealand businesses being reliant on travellers from those regions.

Cinema software developer Vista Group International fell 3.7 percent to $1.55, Air New Zealand dropped 2 percent to $1.46 and global logistics company Mainfreight fell 2 percent to $53.61.

The kiwi dollar was trading 66.98 US cents at 5pm in Wellington, up marginally from 66.89 cents yesterday, after falling from a high of 67.23 cents early Wednesday morning.

ASB economist Mike Jones said the generally risk-sensitive kiwi dollar was strong despite deteriorating global economic conditions as a lift in commodity prices was supporting the currency.

The trade-weighted index was at 71.86 at 5pm, from 71.72 yesterday. The kiwi traded at 93.82 Australian cents from 93.77 cents, 69.85 yen from 70.04 yen, 56.86 euro cents from 56.56 cents, 51.38 British pence from 51.30 pence, and 4.4936 Chinese yuan from 4.4830 yuan.

Tags: Market Close