NZX 50 hits record; kiwi dollar at 18-month high

The kiwi dollar climbed to an 18-month high and New Zealand’s benchmark equity index closed at a new record as risk assets rallied in the wake of the US election results.

Monday, November 9th 2020, 5:59PM

by BusinessDesk

Financial markets have been on a tear since Americans voted. The currency was up 2.7 percent against its American counterpart, while the S&P/NZX 50 Index jumped 3.5 percent.

Mike Shirley, a senior trader at Kiwibank, said investors were dumping the US dollar to chase yields in equities or riskier currencies.

The kiwi dollar was trading at 68.13 US cents, its highest level since March 2019, up from 67.78 cents on Friday and about 66.30 cents before election day.

“Asian equities have done well today, and the kiwi is a currency that tends to track alongside other risk assets,” he said.

Australia’s S&P/ASX 200 and Hong Kong’s Hang Seng were both up roughly 1.5 percent, as they extended a run which saw Wall Street climb more than 7 percent across last week.

NZ’s benchmark equity index rose 225.18 points, or 1.8 percent, to a new high of 12,562.20. Within the index, 36 stocks rose, nine fell and five were unchanged. Turnover was $139.3 million.

Synlait Milk led the market higher for a second day, before it was put in a trading halt pending an announcement. Last week it announced it had settled a legal dispute and added a new customer.

The milk processor’s biggest customer, A2 Milk Company, also rallied 4.3 percent to $15.45, while Fonterra Shareholders’ Fund units fell 2.3 percent to $4.30 in the day’s biggest drop.

Summerset Group chief executive Julian Cook announced he will retire in March after more than 10 years with the retirement village operator.

Chief financial officer Scott Scoullar - who will succeed Cook - said Summerset had enough land to allow it to double in size. Shares in the company rose 4.1 percent to $10.93.

Meridian Energy rose a further 4.3 percent to $5.89, adding to a 6.6 percent gain across last week. Other utility companies gained, with Vector up 3.6 percent at $4.27, Chorus advancing 3.6 percent to $8.95 and Mercury NZ up 3.3 percent to $5.65.

Air New Zealand, which is often considered a riskier stock, climbed 2.7 percent to $1.50.

The strong dollar didn’t discourage investors from buying into exporter Fisher & Paykel Healthcare, the stock was up 2.3 percent at $36.95.

Kiwibank’s Shirley said the Reserve Bank’s monetary policy statement on Wednesday was the next looming risk event which could see the kiwi dollar reverse some gains.

“Whilst there is a lot of positivity around the kiwi at the moment, that may be tempered somewhat as Wednesday afternoon draws closer,” he said.

The trade-weighted index was at 72.10 at 5pm, from 72.06 on Friday. The kiwi traded at 93.46 Australian cents from 93.39 cents, 70.41 yen from 70.08 yen, 57.28 euro cents from 57.31 cents, 51.67 British pence from 51.62 pence, and 4.4857 Chinese yuan from 4.4948 yuan.

BNZ strategist Nick Smyth said commodity and risk-sensitive currencies, such as the kiwi and Australian dollar, have been the best performers in recent days.

Tags: Market Close