NZ sharemarket rises as US debt issues sorted

A re-energised New Zealand sharemarket staged a strong rebound, driven by the two biggest stocks, as the deal on United States’ debt ceiling was sorted.

Thursday, June 1st 2023, 6:30PM

by BusinessDesk

The House of Representatives passed a bill to suspend the country’s US$31.4 trillion (NZ$52.2t) debt limit, through to January 2025, after the United States markets had closed.

Instead, the Asia- Pacific markets surged. After strong afternoon trading, the S&P/NZX 50 Index closed at 11,916.13, up 103.12 points or 0.87%.

There were 46 gainers and 79 decliners on the main board with 33.13 million shares worth $110.6m. Across the Tasman, the S&P/ASX 200 Index was up 0.27% to 7110.8 points at 6pm NZ time.

The Hong Kong Hang Seng Index had risen 0.62% to 18,348.11 points; the Shanghai Composite gained 0.34% to 3215.37; and the Japanese Nikkei 225 Index was up 0.85% to 31,150.57 and is trading at a 33-year high.

Jeremy Sullivan, an investment advisor with Hamilton Hindin Greene, said optimism is returning to the markets.

“We have had data points of slowing inflation and lower interest rates in the Reserve Bank outlook, and value is returning for investors. The US debt ceiling deal is positive for the markets – it’s good to see they managed to come to an agreement rather than the US defaulting (on their debt),” Sullivan said.

In the agreement, debt can grow beyond the ceiling past the 2024 election, though there’s a cap on non-defence spending, an expansion on work requirements for some food stamp recipients, and some covid relief funds are clawed back.

Back in NZ

At home, Fisher and Paykel Healthcare and Meridian Energy – the two biggest local stocks on market capitalisation – made strong gains, rising $1.13 or 4.86% to $24.38 and 14c or 2.64% to $5.45 respectively. Spark increased 12c or 2.33% to $5.28.

Following the trading gyrations of the global MSCI indices rebalancing the day before, Chorus regained 20.5c or 2.5% to $8.39.

In submitting its fibre regulatory report, Chorus calculated its regulated asset base increased from $5.44 billion to $5.71b last year and its revenue was $23m lower than allowed. Together with other adjustments, the wash-up balance of $47m will be carried forward to 2025.

SkyCity Entertainment, which like Chorus, was removed from the MSCI Small Cap Index, was up 4c or 1.82% to $2.24.

Tourism Holdings was down 8c or 2.09% to $3.75 after being removed from the MSCI Micro Index. No NZ stocks were added to any of the MSCI indices.

Contact Energy was up 8c to $7.94; Napier Port also collected 8c or 3.2% to $2.58; Heartland Group gained 5c or 3.18% to $1.62; Vista Group added 4c or 3.01% to 1.37; and Tower increased 1.5c or 2.48% to 62c.

Infratil was down 12c to $9.88; AFT Pharmaceuticals declined 9c or 2.34% to $3.75; PGG Wrightson decreased 9c or 2.12% to $4.15; Gentrack fell 22c or 5.09% to $4.10; Scott Technology was down 5c or 1.82% to $2.70; and Oceania Healthcare retreated 4c or 4.76% to 80c.

Michael Hill was down 1c to $1.01 after telling the market its group sales were down 3.5% in the second half, though the Australian retail jewellery sector has shown a double-digit decline in sales for the same four-month period. Michael Hill’s sales for the financial year to date are up 5.5%.

Michael Hill has completed the purchase of Bevilles Jewellers in Australia for a net enterprise value of $45.1m and is expected to add $60m-$65m in sales. Michael Hill has also refinanced a three-year, $90m credit facility with ANZ and HSBC. Some of it will be used to expand the Bevilles store network.

Among other retailers KMD Brands was up 3c or 2.75% to $1.12; Hallenstein Glasson was down 18c or 2.95% to $5.92; and Warehouse Group fell 6c or 3.43% to $1.69.

WasteCo, unchanged at 7.6c, has completed the purchase of Invercargill-based Cleanways and Enviro South, and Wastech Services based in Cromwell.

Cannasouth was down 2.5c or 8.33% to 27.5c after telling the market it has completed the merger with Katikati-based Eqalis Group. Cannasouth issued 147.89m shares to Eqalis shareholders and raised $7.17m.

NZ Automotive Investments, down 2c or 6.25% to 30c, has refinanced its arrangement with ASB with a lower cost, $5m Finance Now trade facility.

ArborGen Holdings, down 1c or 5% to 19c, earlier reported a 17.9 increase in revenue to US$56.1m and a loss of US$2.5m for the year ending March, in which it sold 375m seedlings from Brazil and the United States. ArborGen has developed a 10m capacity pine nursery in Brazil.

Tags: Market Close