Shares fall as covid case causes concern

New Zealand shares were generally weaker as the covid case in Northland triggered some caution among investors who have pinned their hopes on a fast recovery from the pandemic.

Tuesday, January 26th 2021, 10:06PM

by BusinessDesk

The S&P/NZX 50 Index fell 75.64 points, or 0.6 percent, to 13,323.46. Within the index, 26 stocks fell, 16 rose and eight were unchanged. Turnover was $118 million, lighter than usual with Australian traders off work for a national holiday.

Investor confidence faded over the weekend, as the pandemic delivered yet another round of bad news, said BNZ economist Doug Steel.

Globally these problems ranged from lockdown announcements to delays in the vaccine rollout, while closer to home a Northland woman tested positive for the virus.

As of Tuesday afternoon, all of the woman's close contacts had so far tested negative. Despite this, Australia suspended quarantine-free travel for travellers from NZ for at least 72 hours.

Sam Trethewey, a portfolio manager at Milford Asset Management, said the new case was negatively affecting investor sentiment.

“It reinforces the conservatism that governments are taking to any outbreaks and reinforces that the recovery in stocks might be a bit longer dated than investors had hoped for,” he said.

The effect was most visible in travel related-stocks, which saw a second day of losses.

Auckland International Airport dropped 2.8 percent to $7.29, Serko declined 2.1 percent to $5.50, Tourism Holdings was down 1.6 percent at $2.40, and Air New Zealand fell 1.2 percent to $1.63.

Utilities were also weaker as local investors continued to sell down their stake following strong demand from clean energy indices, Trethewey said.

Contact Energy led the market lower, falling 3.7 percent to $8.90, Meridian Energy dropped 2.5 percent to $7.90 and Mercury NZ was down 2.3 percent at $7.20.

Genesis Energy was the only electricity firm to buck the trend, climbing 1.3 percent to $3.83. As the firm still generates from fossil fuels, it did not have the same price hikes as the clean energy firms did.

The index’s largest firm, Fisher & Paykel Healthcare weighed down the market as it fell 1.8 percent to $34.75. The stock climbed more than 10 percent last week from a four-month low after it gave a trading update showing sales were still elevated.

However, today a note from Forsyth Barr said the increased demand may soon begin to fade as vaccination reduces the number of people hospitalised from covid-19.

Cancer diagnostic firm Pacific Edge posted the day’s biggest rise, jumping 5.9 percent to $1.07, followed by Sky Network Television which leapt 5.7 percent to 16.8 cents.

Both have small market capitalisations and can see big percentage movements.

Infratil rose 2.2 percent to $7.75 as investors reacted to news reports Australian investment management company IFM Investors was looking at making a bid to buy the Kiwi infrastructure investment firm.

In currency markets, the NZ dollar was not materially impacted by the new covid case and continued to trade in the middle of a 71 US cent to 73 cent range.

The kiwi dollar was trading 71.89 US cents at 5pm in Wellington, down from 71.93 cents yesterday.

The trade-weighted index was at 74.50 at 5pm, from 74.72 yesterday. The kiwi traded at 93.33 Australian cents from 93.17 cents, 74.55 yen from 74.67 yen, 59.21 euro cents from 59.11 cents, 52.61 British pence from 52.56 pence, and 4.6520 Chinese yuan from 4.6591 yuan.

Tags: Market Close