Shares close unchanged; Napier Port booted from NZX 50

The New Zealand sharemarket was virtually unchanged on Friday with the benchmark equity index making a 0.4% gain this week despite starting it with a 1.5% fall due to omicron.

Friday, December 3rd 2021, 9:19PM

by BusinessDesk

The S&P/NZX 50 Index rose 6 points, or 0.1%, to 12,676.5. Turnover was $161 million.

Harbour Asset Management said in a note today that the emergence of the omicron variant had reminded investors there was a way to go before conditions get back to ‘normal’.

“But for those companies with pricing power and structural growth drivers, there is potential to keep beating conservative earnings forecasts, supporting equity returns,” the firm said.

Much of the recovery has been driven by bargain hunters who are taking the view that omicron will not significantly stymie stock valuations and buying the dip.

US markets were up significantly overnight despite there being no real news, but with investors still on edge, any bad omicron news could send shares sliding again.

Heartland Group Holdings led the local index, climbing 2.7% to $2.30, followed by Genesis Energy up 2.4% at $3.08.

Plexure Group climbed 2.4% to 42 cents after its recently acquired Task business was selected to deploy its transaction management platform across the Sydney Cricket Ground and the new Sydney Football Stadium precinct.

Index builders S&P Dow Jones today announced fleet management company Eroad would replace Napier Port in the benchmark top 50 index.

As the announcement was made shortly after market close it didn’t affect the stock prices, which each moved in the opposite direction than you’d expect.

Passive investors will have to sell their Napier Port shares and buy Eroad when the change takes effect on December 20, but today the port was up 1.5% at $3.14 and Eroad fell 2% to $4.90.

Analysts had previously flagged this swap was a possibility but relatively unlikely.

Fonterra Shareholders' Fund Units dropped near a one-year low, down 1.4% at $3.55, after the dairy cooperative announced a record high farmgate milk price.

This is also bad news for Synlait Milk, as it will have to match the price, and the stock fell 0.9% to $3.42. Its number one buyer A2 Milk declined 2.4% to $5.76.

Restaurant Brands had the biggest fall, down 3.9% to $14.90.

In the domestic interest rate market, the yield curve has flattened significantly with the 2-year moving upwards to 2.26% and the 10-year rate falling to 2.62%, said BNZ strategist Nick Smyth.

The curve is still a way off inverting, but it is creeping in that direction as the Reserve Bank of New Zealand slowly applies the brakes to the economy.

“An inverted yield curve is often seen as a sign that the market thinks the central bank might ‘overdo’ the tightening cycle, leading to a major growth slowdown in the future,” Smyth said.

The NZ dollar was trading at 67.99 US cents at 3pm in Wellington, down from 68.11 cents yesterday. The currency has slid more than 5% against its American counterpart this month.

Tags: Market Close