Consumer stocks led NZX 50 higher

New Zealand shares rose as record highs on United States stock markets flowed through to the NZX, boosting consumer cyclical stocks in particular.

Monday, August 30th 2021, 6:21PM

by BusinessDesk

The S&P/NZX 50 Index rose 120.79 points, or 0.9%, to 13,180.58. Turnover was $175 million.

The market followed a strong lead from Wall Street on Friday night, driven by US Federal Reserve chair Jerome Powell’s speech which said bond buying would be tapered later this year, but an interest rate hike wouldn’t necessarily follow.

“The dovish overtones to the speech and Powell’s attempt to delink tapering from interest rate hikes were taken positively by the equity market, with the S&P 500 rising 0.9%, to a fresh record high, led by the cyclical sectors,” said BNZ rate strategist Nick Smyth.

Pay television operator, Sky TV led the market higher as it jumped 6% to 17.6 cents per share.

On Friday, the company announced it will keep the rights to popular HBO content after signing a new deal with WarnerMedia.

The stock is a consumer cyclical and has been rallying after beating its earnings guidance twice and predicting to see an increase in annual revenue, its first since 2016, next year.

Equity analysts were not as excited as the market was – the stock price is up almost 11% in the past five days – saying there was reason for optimism, but it was still too early to be confident.

“Encouraging, yes, but in our view not a catalyst for the stock,” Forsyth Barr analysts said.

Cancer diagnostics firm, Pacific Edge returned to its all-time high after it announcing it has applied for a foreign exempt listing on the ASX.

Board chair Chris Gallaher said the dual listing would help the firm attract specialist international healthcare investors, improve liquidity, and even hinted it could get included in an ASX index.

Shares climbed 4.5% to $1.40 – in line with its highwater mark achieved last Wednesday.

“We are now seeing the value of our long-term strategy, with accelerating revenue growth as adoption of our Cxbladder products and test volumes grows,” Gallaher said.

Specialist lender Heartland Group – another cyclical stock – continued to rise further into record territory, up another 4% at $2.35.

The stock has risen almost 10% in the past week, after it reported a 21% increase to net profit in the year ended June. A profit of almost $100m is now likely for 2022.

Oceania Healthcare was up 2.7% at $1.55, as investors acted on the market adage ‘if they issue a bond, buy the equity’.

The retirement village operator is offering up to $100m of seven-year secured bonds to fund its operations.

ANZ Bank had the day’s biggest fall on the NZX 50, down 1.2% at $29.17. Australian shares were mixed with many posting declines.

Outside of the top 50 stocks, Rua Bioscience had the largest decline as it fell 3.7% to 39.5 cents after reporting it had doubled its cash burn rate, resulting in a loss of $1.9m in 2021.

In currency markets, the kiwi dollar edged back above 70 US cents – having been as low as 69.30 in recent days – as the US Federal Reserve put traders in a risk-on mode with its suggestion interest rates could stay lower for longer.

Tags: Market Close