US debt deal boosts NZ sharemarket

Fisher and Paykel Healthcare made a recovery and the New Zealand sharemarket surged nearly one percent on news that an agreement had been reached on the United States debt ceiling.

Monday, May 29th 2023, 6:45PM

by BusinessDesk

The increased investor confidence boosted the S&P/NZX 50 Index which climbed steadily all day and closed at 11,935.65, up 105.62 points or 0.89% and almost wiping out the loss on Friday. There were 101 gainers and just 33 decliners over the whole market, though trading was light with 75.5 million shares worth $75.22m changing hands.

Over the weekend, the White House and House Republicans agreed that the US$31 trillion (NZ$51t) debt ceiling will be raised for two years and there will be a cap on spending.

Greg Smith, head of retail with Devon Funds Management, said the agreement still has to pass through the hoops of Congress and Senate but the timing has come earlier than past impasses and that’s a relief for investors.

“Both sides made concessions and it removes the possibility that the US will default on its debt obligations, though there will be a knock-on impact on borrowing costs,” Smith said. The Dow Jones Industrial Average was up 1% to 33,093.34 points; the S&P 500 gained 1.3% to 4205.45; and the Nasdaq Composite rose 2.19% to 12,975.69 and has now increased 24% for the year.

At home, market leader Fisher and Paykel Healthcare rebounded 45c or 1.88% to $24.43 after falling 6.5% on Friday on slowing earnings growth.

“I thought Fisher and Paykel’s share price decline was harsh," Smith said. "Its revenue and earnings showed business as usual following the huge covid boost. The homecare division and new products provided positives, and there’s still plenty of growth in the pipeline.”

Meridian Energy was up 9c to $5.44; Auckland International Airport gained 9c to $8.83; Spark put on 6c to $5.285; Fletcher Building added 7c to $5.19; Infratil collected 11.5c to $9.99; Chorus increased 13c to $8.36; and Mainfreight was up 50c to $68.50.

Ryman Healthcare gained 11c or 1.82% to $6.14, with new director Dean Hamilton becoming board chair on July 31.

Mercury Energy, up 3c to $6.33, is planning a $100m five-year green bond offer, with the ability to accept another $50m of oversubscriptions. Manawa gained 4c to $4.79.

Contact gained 4c to $7.95 after forecasting in its Capital Markets Day presentation that operating earnings (Ebitdaf) would increase from $550m to $815m in 2027, slightly above market expectations.

Other gainers were Napier Port, up 6c or 2.38% to $2.58; Stride Property, increasing 4c or 2.96% to $1.39; Steel & Tube, collecting 5c or 4.5% to $1.16; and Serko, rising 12c or 4% to $3.12.

T&G Global improved 5c or 2.51% to $2.04; Task Group added 4c or 7.27% to 59c; Gentrack was up 8c or 1.86% to $4.38; and Eroad gained 2c or 3.28% to 63c.

Amongst the decliners, Scott Technology was down 15c or 5.45% to $2.60; NZ Oil & Gas decreased 3c or 7.59% to 36.5c; NZME shed 2c or 2.02% to 97c; and Bremworth was down 2c or 4.88% to 39c.

Heartland Group declined 3c or 1.85% to $1.57; Sky TV was down 5c or 1.93% to $2.54; and Pacific Edge shed 1.5c or 3.23% to 45c.

Sky City Entertainment gained 3c to $2.30 after updating the market on the Adelaide situation. The commissioner for the South Australian gaming regulator has asked SkyCity to appoint an independent expert to review the Adelaide casino’s anti-money laundering financing and host responsibility enhancement programmes.

Eftpos provider Smartpay Holdings rose 16c or 10.32% to $1.71 after reporting a 300% rise in net profit to $8.34m on revenue of $77.77m, up 62%, for the year ending March. Smartpay’s Australian business has grown strongly, with transacting terminals increasing from 9,684 to 15,708 and transactional revenue rising 94% to $60.5m.

Smartpay is the best performing stock on the NZX, having increased 116% over the past 12 months.

NZ Automotive Investments surged 7c or 30.43% to 30c after increasing annual revenue 25.4% to $82.73m, operating earnings (Ebitda) 26% to $6m, and net profit of $1.29m for the 12 months ending March. NZ Auto had an improved fourth quarter and 2 Cheap Cars increased its market share from 4.4% to 4.5% with a total of 8367 vehicle sales, up 6%.

Goodman Property Trust was up 2.5c to $2.20 after announcing John Dakin as chair, to replace long-serving Keith Smith, and David Gibson as deputy chair.

Metro Performance Glass was unchanged at 15.6c after reporting a 12% increase in annual revenue to $236.1m and a net loss of $10.5m because of a $10m impairment on NZ goodwill. Revenue for its Australian Glass Group rose 32%, while NZ’s was up 5%.

Tags: Market Close