Investors prepare for earnings next week

New Zealand shares climbed as investors positioned themselves in stocks exposed to the domestic economy ahead of earnings results set to be released next week.

Tuesday, August 10th 2021, 7:14PM

by BusinessDesk

The S&P/NZX 50 Index rose 63.40 points, or 0.5%, to 12,764.23. Turnover was $165 million.

In a note previewing the August reporting season, Jarden analysts said they expect strong results from stocks with domestic exposure, and weak results and limited guidance from border or covid-affected stocks.

Investors appear to share their expectations, with stocks exposed to the domestic economy performing the strongest.

One of the year’s best performing stocks, Fletcher Building got another boost, up 1.6% to $7.70, ahead of its earnings result next week.

Jarden analysts said they expect the “solid price performance” to continue in financial year 2022, with the construction firm’s result likely to be at the top end of guidance – if not above.

Pharmaceutical company Ebos, which is also reporting next week, rose 1.6% to $31.69. Exporter Skellerup Holdings led the market higher, up 1.9% to $5.44, but on light volume.

Energy stocks, which are exposed to the domestic economy, were dominating headlines today after parts of New Zealand were hit with power outages last night when there was not enough generation to meet demand.

While it is not good news for the electricity generators who will have to deal with political fall out from the mishap, it does highlight the strong demand profile for electricity going forward.

Mercury NZ rose 1.2% to $6.73, Contact Energy was up 1.1% at $8.22, and Meridian Energy climbed 1.1% to $5.22.

Jarden said Mercury was its “preferred gentailer on earnings and dividend growth outlook” and has a ‘buy’ rating on Contact due to it trading below valuation.

Outside the top 50 index, My Food Bag shares dropped to a new low at $1.25 during the session before recovering to close flat at $1.28.

Mobile marketing firm Plexure recovered 3.8% to 55 cents after being sold down brutally when its chief executive abruptly resigned with little explanation.

The kiwi dollar fell a little amid commodity price weakness and was trading at 69.71 US cents at 3pm in Wellington, down from 70.10 cents yesterday.

The trade-weighted index was at 74.23 at 3pm, from 74.52 yesterday. The kiwi traded at 95.28 Australian cents from 95.37 cents, 76.92 yen from 77.27 yen, 59.42 euro cents from 59.64 cents, 50.38 British pence from 50.58 pence, and 4.5209 Chinese yuan from 4.5437 yuan.

Tags: Market Close