Kiwi nears three-year high; NZX50 falls

The New Zealand dollar reached a fresh two-and-a-half-year high as the greenback flagged with investors backing risk-sensitive assets, wagering the global economy will improve as vaccines are rolled out.

Wednesday, December 30th 2020, 6:52PM

by BusinessDesk

The kiwi dollar was trading at 71.75 US cents at 5pm in Wellington, up from 71.18 cents yesterday, its highest level since April 2018.

The trade-weighted index was at 74.47 at 5pm, from 74.10 yesterday. The kiwi traded at 93.84 Australian cents from 93.73 cents, 74.13 yen from 73.81 yen, 58.40 euro cents from 58.16 cents, 52.98 British pence from 52.77 pence, and 4.6785 Chinese yuan from 4.6507 yuan.

Despite the optimistic outlook from currency traders, there was some negativity in equity markets as investors unwound a little of yesterday’s rally as confidence in any upgrade to the US stimulus package faltered.

The S&P/NZX 50 Index fell 29.63 points, or 0.2 percent, to 13,217.14. Within the index, 27 stocks rose, 18 fell, and five were unchanged. Turnover was $95.8 million.

“The US market came off the boil last night, with a little bit of uncertainty around the potential increase to stimulus payments. That threw a spanner in the works, but our market is reasonably flat on the day,” said Shane Solly, a portfolio manager at Harbour Asset Management.

Restaurant Brands led the market lower, falling 3.3 percent to $11.60, on a volume of just 15,000 shares.

Exporter Fisher & Paykel Healthcare was the biggest drag on the index, falling 2 percent to $32.84, with the strong kiwi seen as potentially weighing down future returns.

“We are continuing to see the NZ dollar trek up versus the US dollar, and while Fisher & Paykel will have a lot of hedging in place to protect its near-term earnings from conversion rates, it is something to think about next year,” Solly said.

On the other side of the board, logistics firm Mainfreight climbed 4.3 percent to a record $69.89 – now up more than 65 percent this year.

“The people at Mainfreight spent a long time positioning the business to take advantage of the current environment, and that is definitely paying off,” Solly said.

Cancer diagnostics firm Pacific Edge continued to trade at elevated levels, adding 3.4 percent at $1.22 today.

Retirement village operators Ryman Healthcare and Summerset Holdings both declined as investors cashed in gains after a strong year of returns. Ryman fell 1.9 percent to $15.20, while Summerset dropped 1.7 percent to $12.45.

A2 Milk and its supplier Synlait Milk both slipped back after their recent bounce, 1.4 percent to $12.05 and 1.2 percent to $5.11, respectively.

Investors in Meridian Energy were not discouraged by the NZX’s regulation arm issuing a 'please explain' given its share price had risen more than 20 percent, or $1.30, since Dec. 21.

Meridian said it complied with all disclosure rules and its share price edged up 0.3 percent to $7.85. The price has been climbing due to offshore investors buying into green energy exchange-traded funds, which weight Meridian Energy heavily.

Despite the index falling slightly, the majority of stocks moved higher on the day as the “new year rally” was getting underway, Solly said.

“We are coming into the end of the year with very good pace on, double-digit returns across the New Zealand stock market which for a lot of people will be a nice surprise when they open up their KiwiSaver returns for the full year.”

Tags: Market Close