Shares slip with investors cautious

Most New Zealand shares continued to decline as investors remained cautious about the global outlook after the year kicked off with a generous dose of turbulence and higher bond yields.

Wednesday, January 13th 2021, 8:01PM

by BusinessDesk

The S&P/NZX 50 Index fell 63.41 points, or half a percent, to 13,120.28. Within the index, 27 stocks fell, 19 rose and four were unchanged. Turnover was $173.1 million.

ASB Bank economist Nathaniel Keall said rising covid cases, the chaotic US presidential transition and weak US job data gave plenty for investors to fret over.

“But the tone right now is one of caution rather than outright doom and gloom, and there is the prospect of further stimulus in the US on the way,” he said in a note.

US treasury yields lifted again overnight as markets looked forward to the US stimulus injection. Swap rates on 10-year NZ government bonds peaked at 1.13 percent today, having started the year at 0.94 percent.

Equity investors are also keeping a close eye on the prospect of interest rates climbing, as the large amount of money moved out of term deposits has boosted equity prices.

ANZ Bank’s economic research team today forecast the RBNZ would cut the official cash rate to 0.1 percent in May but go no lower.

“I think the fact that covid is still raging globally means central banks will be reluctant to increase rates to any great extent,” said Peter McIntyre, an advisor at Craigs Investment Partners.

“It is still a yield-hungry market, where investors are seeking alternatives to term deposits.”

Movers

The majority of stocks were weaker today as investors took profit from stocks bid up in recent months.

Pushpay led the market lower, falling 3.7 percent to $1.58. The stock - which has been trending down all month - had a temporary boost from a profit guidance upgrade yesterday, but dropped back to its lowest level since May last year.

Meridian Energy continued to decline as profit-taking investors chipped away its share price, which has been inflated by the stock's inclusion in a global clean energy index.

Shares in the renewable electricity generator fell 3.6 percent to $7.895, after almost reaching $10 earlier in the month.

Pacific Edge, another strong performer, fell 2.6 percent to $1.14.

The benchmark index’s largest stock, Fisher & Paykel Healthcare, remained unchanged at $31.93. McIntyre said the stock price was trapped between divergent analyst valuations.

“Some are pushing towards $40 and some pushing towards $25 and here we are sitting at $32. So, maybe the market is efficiently pricing that stock,” he said.

Spark New Zealand rose half a percent to $4.92, bringing its gain during the past month to more than 9 percent as it has quietly run higher. The telecommunications firm is just 17 cents short of its all-time high - $5.09.

Mercury NZ had the day’s biggest gain, up 4.3 percent at $7.30, followed by stock exchange operator NZX which rose 3.5 percent to $2.09.

The kiwi dollar reversed a three-day slide, climbing to 72.26 US cents at 5pm in Wellington, up half a cent from 71.86 cents yesterday.

The trade-weighted index was at 74.64 at 5pm, from 74.46 yesterday. The kiwi traded at 93.07 Australian cents from 93.08 cents, 74.84 yen from 74.73 yen, 59.15 euro cents from 59.01 cents, 52.79 British pence from 53.01 pence, and 4.6643 Chinese yuan from 4.6386 yuan.

Tags: Market Close