NZ shares rise despite SkyCity falling 5%

US employment data released over the weekend sent most share markets higher, although the local bourse made limited gains as a money laundering probe saw SkyCity Entertainment tumble.

Tuesday, June 8th 2021, 6:20PM

by BusinessDesk

The S&P/NZX 50 Index rose 21.38 points, or 0.2%, to 12,517.65. Turnover was higher than usual at $335.9 million.

Nick Smyth, an interest rate strategist at BNZ, said the US nonfarm payrolls report showed lower-than-expected job growth but had delivered the 'goldilocks' outcome investors wanted.

“The market reaction was consistent with investors seeing less risk of an imminent tapering decision by the Fed, which saw lower bond yields and higher equity markets,” he said.

Equity markets in the United States rebounded, with interest rate-sensitive tech stocks leading the way.

The local market followed a similar pattern with a number of high-yield stocks making gains.

Contact Energy rose 2% to $8.19, Spark NZ rose 1.9% to $4.75, and Chorus was up 1.5% at $6.58.

Meridian Energy also rose half a percent to $5.35, likely encouraged by energy sector analysts predicting the Tiwai Point aluminium smelter would continue operating past 2024.

Forsyth Barr’s latest energy review said the smelter's operations are highly profitable at the moment and despite the likelihood of higher power prices, they believe a power deal will be extended.

Synlait Milk led the market higher, climbing 2.3% to $3.56, now having recovered 23% from its lowest point in May. A2 Milk also gained 1.3% to $6.15.

Shares in SkyCity dropped 5.7% to $3.45 after an Australian regulator identified “potential serious non-compliance” with anti-money laundering and counter-terrorism laws in its Adelaide casino.

AUSTRAC has initiated a formal enforcement investigation into the compliance of SkyCity Adelaide. The casino operator said it will cooperate with the investigation and it takes anti-money laundering responsibilities “very seriously”.

Dairy herd management systems firm, Livestock Improvement Corporation said it had entered into an agreement to divest its automation business to a division of Merck & Co for $38.1 million. Its shares were unchanged at $1.20.

Chair Murray King said the divestment is in line with LIC’s refined strategy and will allow the co-op to sharpen its focus on pasture-based dairy genetics and herd management for NZ farmers.

In currency markets, the US dollar fell back after a strong week when the employment data was more modest than predicted.

BNZ’s Smyth said the “double whammy of lower US Treasury yields and improved risk appetite” weakened the greenback and helped the New Zealand dollar recover some lost ground over the long weekend.

The kiwi dollar was trading at 72.24 US cents at 3pm in Wellington, up from 71.39 cents on Friday.

The trade-weighted index was at 74.94 at 3pm, from 74.40 on Friday. The kiwi traded at 93.20 Australian cents from 93.26 cents, 79.03 yen from 78.69 yen, 59.28 euro cents from 58.89 cents, 50.98 British pence from 50.64 pence, and 4.6172 Chinese yuan from 4.5725 yuan.

Tags: Market Close