NZ shares step higher ahead of earnings

Software stocks led New Zealand shares higher on Wednesday after the US Nasdaq Index rose 1% overnight as its technology stocks stabilised.

Wednesday, February 9th 2022, 6:58PM

by BusinessDesk

The S&P/NZX 50 Index rose 114 points, or 0.9%, to 12,433.95. Turnover was $147 million.

Tina Teng, a markets analyst at CMC Markets, said tech shares had found their footing after the big Meta drop earlier this week.

“Tech stocks stabilised after Chinese stocks listed in the US were boosted after state-backed funds were said to have entered the local market to buy shares,” she said.

Pay-TV operator Sky Network Television led the local index higher as it climbed 2.7% to $2.69. It was followed by Vista Group and Serko which each rose 2.8% to $2.20 and $5.50, respectively.

Shares in chemical logistics company DGL Group surged 11.6% to $3.27 after it hiked its earnings guidance way above the forecast in its initial public offer prospectus last year.

The dual-listed company now expects to report revenue of A$343 million in the June financial year and earnings A$54m, up from the A$209.7m and A$29m forecast in May.

A Harbour Asset Management note today said the stock market was likely to “grind its way back up” with two steps up and one back down as central banks tighten policy.

“Earnings historically offer the strongest support to equity returns during times of unease and, as central banks shift stance, we expect earnings to have a bigger influence on stock prices,” it said.

Contact Energy this week confirmed its Tauhara geothermal project was facing increased costs and will be delayed several months.

However, Macquarie analysts today reiterated their outperform rating for Contact Energy ahead of its half-year earnings report next week, valuing the stock at $10 per share.

Forsyth Barr was more sceptical, trimming 20 cents – to $8 – from its target price mostly due to a 50-basis point increase to the risk-free discount rate used to value the company.

The stock climbed 1.9% to $8.24 today, while Meridian Energy was up 1% at $4.90 and Genesis Energy rose 0.4% to $2.90

SkyCity Entertainment was unchanged at $3.09 today. Equity analysts are expecting its first half result on Monday to show earnings down as much as 75% due to covid disruption.

Investors and analysts will be primarily focused on the strength of the casino operator’s balance sheet and any outlook it can give about trading through the omicron outbreak.

Shares in Vulcan Steel dropped 0.7% to $10 ahead of its earnings report due Wednesday morning, which is expected to be strong.

Air New Zealand fell 1.8% to $1.635 and Tourism Holdings dropped 1.8% to $2.80, after getting a boost earlier this week from border reopening plans.

The NZ dollar continued to trade in a narrow range, virtually unchanged from yesterday at 66.43 US cents at 3pm in Wellington.

If US inflation data, which is set for release on Thursday night, looks too hot the kiwi could fall below 66 cents as investors predict more aggressive US monetary policy.

Tags: Market Close