NZ50 ends the week on a flat note

Leading stock Mainfreight had a turbulent day following its weaker trading update as the New Zealand sharemarket ended the week on a flat note.

Friday, July 28th 2023, 6:23PM

by BusinessDesk

The S&P/NZX 50 Index traded in a narrow range and closed at 11,946.74, down 7.37 points or 0.06%. The index also finished flat for the week and is up 4.1% for the year.

There were 62 gainers and 64 decliners on the main board, with 25.31 million shares worth $86.43 changing hands.

Wall Street and the Australian market were both down, and the Dow Jones Industrial Average Index, established in 1896, just missed a unique milestone after falling 0.67% to 35,282.72 points.

The Dow Jones had risen on 13 successive days, and just one more would have tied the longest winning streak since 1897. The S&P 500 was down 0.64% to 4537.41 points, and Nasdaq Composite declined 0.55% to 14,050.11.

US gross domestic product for the second quarter increased 2.4%, better than the market expectation of 2%, and this reignited fears that the Federal Reserve will keep going with interest rate rises to combat inflation.

Across the Tasman, the S&P/ASX 200 Index was down 0.72% to 7402.3 points at 5.45pm NZ time, with resources and property stocks taking a tumble.

At home, the ANZ-Roy Morgan Consumer Confidence Index was down slightly in July. A net 39% (of respondents) said it’s a bad time to buy a major household item – a 12-point fall and back around its lows.

ANZ Research said that doesn’t bode well for retailers. “A slowdown in consumer spending is under way and likely has some way to run, given the Reserve Bank views it as a prerequisite for bringing inflation sustainably back down to target.”

Global transport and logistics company Mainfreight declined $1.74 or 2.5% to $67.99 on trade worth $18.21m after fluctuating between a low of $67.41 and a high of $69.50 during the day.

Mainfreight had earlier reported a 19.2% decline in group revenue to $1.18 billion and a 43.3% fall in gross profit to $83.6m for the June quarter because of reduced volumes globally.

Matt Goodson, managing director of Salt Funds Management, said the Mainfreight update was well below market expectations in a number of areas.

“It was a chunky downgrade in earnings but far less in valuation. The analysts had already made significant cuts (in their forecasts) and hadn’t thrown the baby out with the bathwater.

“It’s a hard one to know when the cycle (downturn) will bottom out given all the covid effects, and I think the market reaction to Mainfreight was measured,” Goodson said.

Cancer diagnostics company Pacific Edge fell 4.2c or 24.56% to 12.9c after the Medicare contractor Novitas again said the Cxbladder testing was “not considered medically reasonable and necessary”.

However, Novitas is allowing Pacific Edge and other affected companies to respond to its latest local coverage determination within 45 days, along with a public meeting on Aug 11.

Goodson said, “I think there was some retail shareholder panic in not understanding the information provided. Nothing has changed for Pacific Edge, and Medicare will still pay it while Novitas works through the (review) process."

Fisher and Paykel Healthcare was down 20c to $24.30; Freightways shed 12c to $8.48; Arvida Group decreased 3c or 2.36% to $1.24; Tourism Holdings fell 13c or 3.62% to $3.46; and Restaurant Brands declined 12c or 1.89% to $6.23.

Other decliners were 2 Cheap Cars falling 9c or 14.06% to 55c; Rakon decreasing 2c or 2.63% to 74c; NZME also down 2c or 2.04% to 96c; and Blackpearl Group shedding 5c or 8.47% to 54c.

Ebos Group added 50c to $38.26; Infratil was up 15c to $9.87; Manawa Energy gained 7c to $4.80; Westpac Bank increased 71c or 3.03% to $24.12; and AFT Pharmaceuticals increased 10c or 2.74% to $3.75.

Synlait Milk was up 3c or 1.89% to $1.62; Vista Group increased 6c or 3.33% to $1.86; and Bremworth added 2.5c or 5.56% to 47.5c.

Takeover target Eroad, up 1c to $1.41, provided full-year guidance at its annual revenue meeting in the range of $175m-$180m, up 6-9%, and operating earnings (Ebit) of nil to $5m. Research and development spending in the 2024 financial year will be $30m.

NZ Oil & Gas was up 1c or 2.56% to 40c after the joint venture partners in the Northern Territory Amadeus Basin oil fields upgraded their total reserves in Palm Valley with a 14% increase to 2.1m barrels equivalent, and Dingo, up 13% to 3.5m barrels.

Smartpay Holdings, with 47,000 merchandising terminals in the market, was down 4c or 2.01% to $1.89 after reporting a 39% increase in revenue to $22.6m and a 51% rise in operating earnings (Ebitda) to $5.3m for the first quarter at its annual meeting. Australia's transaction revenue was up 52% to $18.2m.

Tags: Market Close