NZ shares rise as 'bad news is good news'

New Zealand's benchmark share index rose with US markets which appear to be expecting weak job data overnight that could make the Federal Reserve (Fed) think twice about aggressive rate hikes.

Friday, June 3rd 2022, 6:59PM

by BusinessDesk

The S&P/NZX 50 Index rose 68 points, or 0.6%, to 11,417.34. Turnover was $91. million.

Yesterday, markets reacted negatively to strong US manufacturing data. Today investors reversed the decline after some weak labour market data emerged.

“Good news is seen as bad news for the market and bad news is seen as good news for the market,” said BNZ strategist Jason Wong.

In essence, bad economic data might dissuade the Fed from pushing through rate hikes which slow the economy and hurt equity valuations.

A more important US labour market data release is scheduled for Friday night, NZ time.

A basket of stocks sensitive to economic growth moved higher on Friday.

Vulcan Steel rose 2.7% to $9.70, Fletcher Building rose 2.2% to $5.54, and NZ Oil and Gas was up 2.2% at 47 cents.

Heavyweight stocks boosted the index’s headline gain, Mainfreight was up 2% at $81.55, Auckland International Airport rose 2% to $7.74 and Meridian Energy climbed 1.8% to $4.785.

As expected, there were no changes to which stocks will be included in the S&P/NZX indices after the June 2022 quarterly rebalance.

My Food Bag Group continued to gain ground, up 4.4% at 94 cents today.

NZME shares fell 0.8% to $1.28, after large shareholder Osmium Partners said they had sold more than $11 million worth of shares in the three months ended May.

Equity analysts at Macquarie recently downgraded the entire listed Australian media sector as the risk of an economic slowdown grows and threatens advertising revenue.

Sky Network Television shares fell 2.2% to $2.64 and honey maker Comvita declined 0.3% to $3.31, despite takeover rumours still lingering around both stocks.

Pacific Edge fell 2.5% to 79 cents, and Ryman Healthcare dropped 3% to $9.25.

Shares in stock market operator NZX declined 1.6% to $1.26 despite a big increase in trading volumes during May.

The total value traded across the NZX was $3.87 billion, an increase of 22% from April. The increase was strongest in wholesale trading, which lifted 24%, while retail trading also rose 10%.

This boost was largely driven by Ryman Healthcare falling out of an MSCI Standard Index at the end of May, forcing index trackers to trade out of the stock.

The NZ dollar was trading at 65.55 US cents at 3pm in Wellington, up from 64.72 yesterday.

Investors' willingness to take on risk meant they sold the US dollar and pushed the Aussie and NZ dollars up in comparison. The trade-weighted index was at 72.59, from 72.02 yesterday.

Tags: Market Close