NZ shares snap back after shock of war

New Zealand's sharemarket picked up on a last-minute Wall Street surge and continued its resilient rally which has lifted the benchmark equity index recovery almost 4% in the past three days.

Tuesday, March 1st 2022, 6:48PM

by BusinessDesk

The S&P/NZX 50 Index rose 220 points, or 1.8%, to 12,197.92. Turnover was $177 million.

US indices traded lower for most of the overnight session but spiked into the close to either recover much of their losses or even turn green in the case of the Nasdaq Index.

Tina Teng, a markets analyst at CMC Markets, said stock markets had bounced off their lows as investors digested the impact of new sanctions on Russia.

Local analysts have speculated the worst of the financial shock from the crisis is now behind markets and investors should turn their attention back to inflation risks.

Greg Smith, head of retail at Devon Funds, said it was likely that markets will “snap back” as they did after previous conflicts when the initial shock of war wears off.

However, he said the conflict will fuel inflation as Russia is a key producer of oil and the world’s largest producer of wheat – prices of both commodities have jumped recently.

Pushpay Holdings led the local market higher, rallying 6.5% but stopping just short of $1 at 99 cents per share.

Meridian Energy bounced 5% to $5.25, and small-time electricity generator NZ Windfarms also lifted 5% to 21 cents.

Meridian was sold off heavily after it reported its first set of earnings with the impact of the new Tiwai Point electricity contract, which was a $40m drag on the first half of the financial year.

However, Jarden senior analyst Grant Swanepoel said last Wednesday the flat earning was a good result, considering the firm had heavily discounted its largest single contract.

Air travel stocks were higher today after the government announced the borders will reopen to NZ citizens without self-isolation requirements.

Air NZ shares bounced 3.7% to $1.55 and Auckland International Airport was up 3.2% at $7.35.

Analysts almost universally consider the airline to be a good company, but irrationally overvalued by the market.

As one wrote in a note earlier this week: “Is this still a damn good airline brand? Absolutely. Is it well run? Ditto, but we still can’t get near the current stock price”.

Tourism Holdings had a bounce yesterday and fell back 1.9% to $2.57, today.

Vista Group International, which was one of the last companies to report this round, rose 2.5% to $2.02. The cinema software company reported a loss of just $9.8m, down from $51.8m last year.

Synlait Milk had the day’s steepest decline, falling 2.1% to $3.30 – the conflict in Ukraine has the potential to push up dairy prices and raise the input costs for the processor.

The NZ dollar has suffered in recent days as risk-averse traders flocked to the US dollar. However, it climbed with commodity prices and local interest rates today, trading at 67.62 US cents at 3pm in Wellington, up from 66.90 cents yesterday.

Tags: Market Close