NZX50 lifts ahead of long weekend on low volumes

The New Zealand sharemarket moved into the Matariki holiday with a near one percent gain on confidence that inflation is being tamed and bond yields have peaked.

Thursday, July 13th 2023, 6:28PM

by BusinessDesk

Mainfreight went higher after overcoming challenging trading conditions to record another positive annual result.

The S&P/NZX 50 Index climbed steadily from lunchtime and closed at 12,013.43, up 105.16 points or 0.88% on light trading.

There were 89 gainers and 41 decliners on the main board, with 23.23 million shares worth $82.45m changing hands.

Paul Robertshawe, chief investment officer with Octagon Asset Management, said two brokers told him it was the quietest day they can remember for responses from fund managers – except for the two and a half days trading between Christmas and New Year.

“Lots of people are having a very long weekend. There was a positive undertone to the market, but volumes were light, with some smaller stocks moving around,” Robertshawe said.

“The United States consumer price index (CPI) was lower than expected, house prices in NZ are into their fourth month of growth, though annual growth is still negative, and the government ruled out a wealth tax which is good for the market. All these [factors] have added more confidence."

The US June CPI increased by 3%, with economists expecting 3.1%. This fuelled hope that the Federal Reserve could bring down inflation without pushing the economy into a recession.

The S&P 500 Index reached a new high for the year after increasing 0.74% to 4472.16 points. And the technology-driven Nasdaq Composite kept climbing, up 1.15% to 13,918.96 and rising 33% so far this year.

In NZ, food prices increased 12.5% in the year ending June, matching the highest level for 36 years seen in April. Fruit and vegetable prices rose 22% compared with June last year; groceries were up 12.8%; meat, poultry and fish increased 11%.

The only categories rising by single-digit figures were non-alcoholic beverage prices, up 9.7%, and restaurant and ready-to-eat food prices, increasing 9.2%.

However, ANZ Research expects annual CPI inflation, released next week, to decline to 5.9%, below the Reserve Bank’s forecast of 6.1%.

On the market

Global transport and logistics company Mainfreight increased $1 to $72 after providing a sneak preview of its latest annual result in the July newsletter sent to more than 11,300 staff members in 331 branches across 26 countries.

Mainfreight increased revenue by $457m to $5.68 billion and gross profit by $98m or 20% to $587m – the result coming from a strong first half of trading.

Mainfreight said: “Our performance during the second half fell short of expectations as international freight congestion unravelled, which included a reduction in sea and airfreight rates.

“While this provided much-needed rate relief and space availability for our customers, it has slowed our performance from the strong levels of growth we encountered over the past two years.”

Over the past year, Mainfreight added 34 more branches, 2,071 staff and one country location (Indonesia), and over the past two years, sales revenue has increased by 60% and gross profit by 124%.

Mainfreight is investing $676m for further growth through to the end of 2025 and said the softening economic environment provides opportunities where competitors weaken or disappear, and customers are looking for efficient, high-quality services.

Robertshawe said the Mainfreight result isn’t surprising.

“But I’m a little surprised at how strong the share price has been. Mainfreight went ex-dividend this week, and investors appear to be looking through the valley of a cyclical downturn because it’s such a high-quality stock.”

Fisher and Paykel Healthcare was up 27c to $24.46; Auckland International Airport gained 7c to $8.40; Meridian Energy added 5c to $5.55; a2 Milk collected 10c or 1.84% to $5.53; and Fletcher Building increased 17c 3.14% to $5.58 as the housing market improves.

Chorus gained 11c to $8.41; Infratil was up 13c to $9.99; Scales Corp collected 11c or 3.32% to $3.42; Heartland Group improved 4c or 2.26% to $1.81; and Tourism Holdings was up 7c or 1.98% to $3.60.

The retirement sector is also benefiting from the recovering housing market. Summerset Group was up 10c to $10.45; Ryman Healthcare added 5c to $6.90; Oceania Healthcare increased 2c or 2.56% to 80c; and Arvida Group increased 3c or 2.44%;

Vista Group gained 5c or 2.78% to $1.85; Blackpearl Group rose 11c or 23.91% to 57c; My Food Bag was up 1c or 4.55% to 23c; and 2 Cheap Cars increased 7c or 13.46% to 59c, having doubled its share price over the past two weeks.

Comvita fell 12c or 3.73% to $3.10; NZME was down 3c or 3.13% to 93c; Sky TV shed 4c to $2409; PGG Wrightson declined 9c or 2.15% to $4.10; and Move Logistics decreased 2c or 2.38% to 82c.

Tags: Market Close