Omicron ordeal knocks NZ index 200 points

New Zealand shares recovered from a shock open after falling almost 200 points in the first half-hour of trading as investors reacted to the omicron covid variant.

Monday, November 29th 2021, 6:53PM

by BusinessDesk

The S&P/NZX 50 Index closed down 97 points, or 0.8 percent, at 12,531.66. Turnover was $187 million.

Financial market watchers were already braced for a rough start to the session after the S&P 500 in the United States dropped 2.3% on Friday night.

NZ’s index dropped 1.3% on Friday as news of the covid variant, identified in South Africa, was first breaking.

Jarden’s head of wealth research, John Norling said having the news break over the weekend may have given investors a chance to “mull it over” and softened the hit today.

“Rather than sitting around watching prices move and wonder if they should jump in a buy or sell positions,” he said.

“It's clearly bad news, there is no way you can say it’s not bad news. But at this stage it's a bit hard to say it's Armageddon – in fact, it’s certainly not”.

Jeffrey Halley, a senior market analyst at Oanda, said investors were “shooting first and asking questions later” on Friday as they sold risk assets and bought government bonds.

“Interestingly, both gold and bitcoin flopped as well, and it seems neither is a haven or an inflation hedge when the flag really goes up,” he said in a note.

The local equity index improved over the day as US market futures rallied and as Fisher & Paykel Healthcare gained ground closing up 1.3% at $33.

When F&P Healthcare reported half-year earnings last week its chief executive said revenue was expected to decline in the second half, in the absence of another covid surge.

The stock commonly climbs when bad covid news hits the headlines as its sales of hospital products closely tracks hospitalisation numbers.

F&P Healthcare makes up more than 13% of the index, so its 1.3% gain helped to offset the widespread losses in the rest of the market. Only 29 of the 188 listed securities moved higher.

Travel booking company Serko led the decline, falling 5.6% to $6.37, having recently raised capital and announced earnings guidance well below expectations.

The company is just waiting for business travel to restart globally and is investing aggressively on the expectation that it will do so.

Air New Zealand dropped 3.2% to $1.525, the national carrier has delayed its capital raise hoping for more outlook certainty which has yet to materialise.

Casino operator SkyCity Entertainment dropped 2.6% to $3.02 and Tourism Holdings fell 1.8% to $2.80.

SkyCity said it has secured debt covenant relief from its banking syndicate and another $50 million in debt facilities while it rides out the impacts of pandemic lockdowns – it also cancelled its annual fireworks show due to covid.

Radius Residential Care fell almost 5% to 48.5 cents per share as profit dropped 35% due to high labour costs

The NZ dollar lost another two basis points as traders bought the world’s go-to currency in a time of crisis. It was trading at 68.24 US cents at 3pm in Wellington, down from 68.43 on Friday.

Tags: Market Close