Sharemarket rally pauses, but good gains for some stocks

New Zealand's main share index and the kiwi dollar both edged lower with investors hitting pause on a two-month strong run caused by buying risk assets in hopes of global economic recovery.

Thursday, December 10th 2020, 6:04PM

by BusinessDesk

The kiwi dollar was trading at 70.36 US cents at 5pm in Wellington, down from 70.52 cents yesterday.

The trade-weighted index was at 73.70 at 5pm, from 73.85 yesterday. The kiwi traded at 94.15 Australian cents from 94.87 cents, 73.47 yen from 73.45 yen, 58.17 euro cents unchanged from yesterday, 52.62 British pence from 52.72 pence, and 4.6035 Chinese yuan from 4.6022 yuan.

Pat Gilligan, a director at Forex Ltd, said the currency was just pausing for breath after being pushed higher by weakness in the US dollar throughout November.

On Dec. 4 the dollar briefly hit 71 US cents but has trended lower since, dipping down near 70 cents.

“I don’t think the pause will last very long,” Gilligan said. “I don’t think it is anything other than a breather.”

Gilligan said the US dollar was still weak, the Reserve Bank had gently backed away from negative interest rates, and NZ was covid free. All factors helping the NZ dollar climb and reducing the earning power of local exporters.

“The kiwi has gone up 7 percent since the start of November. That overall theme of a weaker US dollar remains, unfortunately for New Zealand exporters,” he said.

US-focused exporter Fisher & Paykel Healthcare, down 0.9 percent at $31.79, was among the stocks pushing the benchmark equity index back from yesterday’s record high.

The S&P/NZX 50 Index fell 29.03 points, or 0.2 percent, to 12,860.37. Within the index, 25 stocks fell, 21 rose and four were unchanged. Turnover was $146.1 million.

Utility stocks that have been aggressively bid up as investors chase green infrastructure investments reversed some gains.

Meridian Energy led the market lower, falling 2.4 percent to $6.89, while Contact Energy declined 1 percent to $8.02 and Infratil — which leapt almost 20 percent yesterday — also dropped back 1 percent to $7.18.

Amid ongoing speculation about the AustraliaSuper takeover bid, Infratil-owned Trustpower continued to rally, climbing 2.6 percent to hit $8.05, while Tilt Renewables fell 8.6 percent to $5.04 — still almost a dollar higher than where it started the week.

Oceania Healthcare posted the day’s biggest gain, advancing 3 percent to $1.32.

Outside the NZX 50, Michael Hill International jumped 10.5 percent to 63 cents after it said same-store sales for October and November were up 8.5 percent against last year.

The company now expects to deliver a half year earnings result “materially exceeding” the prior year’s first half result, $31.6 million, even before adding wage subsidies.

Aged care and retirement village provider Radius Residential Care today listed on NZX at 80 cents but is yet to be traded.

Tags: Market Close