NZ shares fall as covid concerns investors

New Zealand's main share index fell with other Asian bourses, as the local market caught up with souring economic sentiment triggered by the spread of covid-19 globally.

Tuesday, December 15th 2020, 7:12PM

by BusinessDesk

The S&P/NZX 50 Index fell 67.95 points, or 0.5 percent, to 12,767.17. Within the index, 32 stocks fell, 11 rose and seven were unchanged. Turnover was $204.5 million.

Stephen Innes, chief global markets strategist at AxiCorp, said investors had been spooked by new virus restrictions, which were being tightened significantly in Europe and the US for the first time since covid vaccines were announced.

“The latest New York lockdowns have sent a not so pleasant holiday jingle-jangle across risk assets,” he said.

Share markets across Asia were all off half a percent, while only the tech-heavy Nasdaq on Wall Street avoided a sell off.

Contact Energy led the local market lower, falling 3.3 percent to $8.02, although it bounced 5 percent yesterday with little explanation. Meridian Energy had the day’s largest gain, climbing 1.1 percent to $6.60.

Retailer Kathmandu Holdings and cinema software developer Vista Group International had the second biggest declines, each dropping roughly 3 percent to $1.26 and $1.70, respectively.

Both stocks have been negatively affected by covid outbreaks and the resulting lockdowns across Australia and Europe.

Air New Zealand declined 1.3 percent to $1.865 and Auckland International Airport slid 0.6 percent to $7.90.

Dual-listed banks were also weaker as the negative mood hit stocks closely tied to economic performance. Australia & New Zealand Banking Group dropped 1.9 percent to $24.32, Westpac Banking Corp fell 1.7 percent to $21.07.

ASB Bank senior economist, Mike Smith said this week was pivotal for the global economy.

United States lawmakers have set an end of week deadline to agree a fiscal relief package, the electoral college voted in favour of Joe Biden despite President Donald Trump’s ham-fisted efforts to disrupt, and Brexit negotiators are saying a trade deal is still possible.

While New Zealand may feel a long way from these events, the global context does affect the domestic economy.

For example, Mainfreight has cited disruption from Brexit as both a challenge and an opportunity to win market share from low-cost logistics providers. Its share price climbed 0.2 percent to $62.10, today.

Pacific Edge — which rose another 1 percent to $1.03 today — is heavily dependent on future revenue from the United States’ government health insurance provider which is more likely to be expanded under a Democratic president.

An export stock like Fisher & Paykel Healthcare — which held at $32.06 today — will likely have its earnings reduced if a fiscal stimulus package pushes the US dollar even lower.

The kiwi dollar was trading 70.75 US cents at 5pm in Wellington, down from 70.93 cents yesterday.

The trade-weighted index was at 74.01 at 5pm, from 74.07 yesterday. The kiwi traded at 94.15 Australian cents from 94.08 cents, 73.67 yen from 73.76 yen, 58.22 euro cents from 58.46 cents, 53.04 British pence from 53.21 pence, and 4.6364 Chinese yuan from 4.6381 yuan.

Tags: Market Close