F&P Healthcare drags index lower

New Zealand shares fell as Fisher & Paykel Healthcare dropped and global equity investors were spooked by the US treasury secretary raising the prospects of rate hikes.

Wednesday, May 5th 2021, 8:21PM

by BusinessDesk

The S&P/NZX 50 Index fell 63.88 points, or 0.5%, to 12,848.31. Within the index, 21 stocks fell, 20 rose and 9 were unchanged.

Just three days ago, Fisher & Paykel Healthcare was trading at $36.45 – a year-to-date record and just fractionally below its all-time high – now it is 5% below that highwater mark at $34.55, after a 2.8% drop today.

Yesterday, the healthcare exporter set a date, May 27, to announce its financial results for the year ended March. Investors are expecting to see its hospital respiratory division continue to perform well with covid still running rampant.

Other parts of the business, such as sleep apnoea and homecare products, have been negatively affected by the pandemic. Analysts have mixed views on whether the company’s huge success during the pandemic will translate to a significant long-term earnings increase.

After its result announcement, F&P Healthcare will hold a three-day virtual conference bringing investors up to speed on its plans for “long-term sustainable profitable growth”.

While F&P Healthcare’s share price remains volatile due to this uncertainty, today’s fall was likely driven by weakness seen in the US share market.

Treasury secretary Janet Yellen, a former chair of the Federal Reserve, was quoted as saying interest rates may have to rise to stop the US economy from overheating.

These comments appeared to trigger a sell off among highly valued Nasdaq tech stocks, the index fell almost 2%.

“Previous price action shows that when the market fears higher interest rates then big tech stocks get hit the hardest,” said Jason Wong, an interest rate strategist at BNZ.

In the absence of large technology stocks listed on the NZX, other large and highly priced stocks tend to decline first.

Contact Energy fell 1.7% to $7.65, Mercury NZ was down 1.7% at $6.97 and ANZ Bank dropped 2.6% to $30.32. Travel booking software company Serko fell 2.2% to $6.75.

Restaurant Brands climbed 4.1% to $13.95, by far the largest gain on the day. The fast-food company reported strong sales growth this time last week but declined to offer earnings guidance.

The risk-off mood in equity markets was supportive for safe haven currencies such as the US dollar and the Japanese Yen. The kiwi and Aussie dollars both underperformed.

The kiwi dollar was trading at 71.71 US cents at 3pm in Wellington, down from 71.84 cents yesterday.

The trade-weighted index was at 74.92 at 3pm, from 75.01 yesterday. The kiwi traded at 92.71 Australian cents from 92.79 cents, 78.40 yen from 78.47 yen, 59.65 euro cents from 59.63 cents, 51.56 British pence from 51.74 pence, and 4.6407 Chinese yuan from 4.6491 yuan

Tags: Market Close