Shares fall as coronavirus woes return

New Zealand shares joined a worldwide rout as Europe’s return to lockdown reminded investors the pandemic still poses a serious threat to the global economy.

Thursday, October 29th 2020, 7:04PM

by BusinessDesk

The S&P/NZX 50 Index fell 62.72 points, or 0.5 percent, to 12,201.80. Within the index, 38 stocks fell, nine rose and three were unchanged. Turnover was $172.3 million.

As the northern hemisphere heads into winter, covid cases have been rising and country-wide restrictions are being re-imposed in France and Germany.

US and European equity markets fell sharply in response to the month-long partial lockdowns in the region’s biggest economies.

Indices on Wall Street dropped more than 3 percent on Wednesday night as political uncertainty and the absence of fiscal stimulus dovetailed with the new restrictions.

“Nights like last night are a reminder that we are not out of the woods yet. There are going to be second waves and a lot more disruption,” said Mark Lister, head of private wealth research at Craigs Investment Partners.

Asian markets were also weaker, although the effect was more muted as the region largely avoided widespread repeat outbreaks. The NZ market was more resilient due to its naturally defensive nature.

“The reaction has been to go back to those safe, more predictable stories that worked so well earlier in the year,” Lister said.

While the majority of stocks fell, behemoth Fisher & Paykel Healthcare rose 2.9 percent to $36.99 softening the index loss, despite weakness in the rest of the market.

Oceania Healthcare and Australia & New Zealand Banking Group led the market lower on light volumes, each falling 3.6 percent to $1.33 and $19.74, respectively.

Air NZ dropped 3.4 percent to $1.41 with 1.4 million shares changing hands as the covid sensitive stock lost ground.

“If you are out there chasing Air New Zealand and risk stocks, you’ve just got to accept that when we get these bad days they are going to suffer,” Lister said.

Vista Group International fell 3.2 percent to $1.50, Z Energy declined 2.4 percent to $2.84 and Tourism Holdings dropped 2.2 percent to $2.24.

The declines were spread across all industries with property, retirement, utilities and even tech stocks posting notable losses.

Two companies with positive trading updates managed to rise above the maelstrom.

Skellerup Holdings posted the day’s biggest rise, gaining 5.4 percent at $3.13, after chair Liz Coutts said she expects the rubber goods maker to deliver a strong increase in earnings in the 2021 financial year.

Net profit is forecast to be in the range of $30 million to $35 million for the 12 months ending June 30, comfortably ahead of the 2020 result of $29.1 million.

Local bellwether stock Freightways rose 1.8 percent to $8.40 after the logistics company also gave a positive trading update showing overall revenue was up 46 percent against the same period last year, at $168 million.

The kiwi dollar was trading 66.49 US cents at 5pm in Wellington, down from 66.98 cents yesterday and an overnight high of 67.20 cents, as the oddly resilient currency reacted to the cautious market tone.

Safe-haven currencies such as the greenback and the yen performed strongly, while risk-sensitive commodity-linked currencies weakened.

The trade-weighted index was at 71.51 at 5pm, from 71.86 yesterday. The kiwi traded at 94.06 Australian cents from 93.82 cents, 69.45 yen from 69.85 yen, 56.56 euro cents from 56.86 cents, 51.12 British pence from 51.38 pence, and 4.4623 Chinese yuan from 4.4936 yuan.

Tags: Market Close