The NZX50 remained steady as overseas markets get spooked

The New Zealand sharemarket shrugged off weak offshore bourses as the United States credit rating was downgraded because of “a steady deterioration in standards of governance”.

Wednesday, August 2nd 2023, 6:35PM

by BusinessDesk

After a mixed day on Wall Street, the S&P/NZX 50 Index fell sharply in the morning to a low of 11,924.15 but then recovered to finish flat at 11,962.04, down 18.36 points or 0.15%.

There were 52 gainers and 76 decliners on the main board, with 30.43 million shares worth $107.06m changing hands.

Rating agency Fitch put the cat among the pigeons by downgrading US debt from AAA to AA+, citing fiscal deterioration over the next three years and repeated down-the-wire debt ceiling negotiations that threaten the government’s ability to pay its bills.

The move surprised investors. The Hong Kong Hang Seng index was down 2.17% to 19,575.94 points at 6pm NZ time, and Japan’s Nikkei had fallen 2.23% to 32,729.76. Across the Tasman, the S&P/ASX 200 Index was down 1.25% to 7357.4 points.

Before the Fitch announcement, the Dow Jones Industrial Average had its 16th gain in 17 trading sessions, increasing 0.2% to 35,630.68 points.

Matt Goodson, managing director of Salt Funds Management, said the local market continues to march on, oblivious to the macro-economic risks offshore.

“It’s pretty quiet, volumes slightly improved, and the market is awaiting the earnings season [later this month],” he said.

Latest statistics showed unemployment increased to 3.6% from 3.4% in the second quarter, slightly higher than the forecast of 3.5%. But employment growth rose 1%, much stronger than the expected 0.6%.

ANZ Research said while the labour market undoubtedly remains beyond maximum sustainable employment, there were unders and overs in the data, and the numbers are unlikely to move the dial for the Reserve Bank one way or the other.

“We remain sceptical of the Reserve Bank’s expectation that the unemployment rate will rise as steeply as it did during the global financial crisis over coming quarters,” ANZ said.

Stock moves

Ebos Group was down 56c to $37.24; Chorus declined 16c or 1.87% to $8.415; a2 Milk decreased 9c to $5.42; Summerset Group also shed 9c to $10.11; Tourism Holdings gave up 8c or 2.3% to $3.40; and Investore fell 6c or 4.08% to $1.41.

Goodson said Investore, owner of bulk retail buildings, has had a good run lately, but there was concern about the sustainability of its dividend return. Some supermarkets are up for sale, and this could lead to new valuation benchmarks.

In the energy sector, Contact was up 6c to $8.36, and Manawa was down 5c to $4.75. Utilities investor Infratil gained 7c to $9.91.

Smartpay Holdings decreased 4c or 2.23% to $1.75; Steel & Tube was down 3c or 2.42% to $1.21; Bremworth declined 3c or 6.25% to 45c; and Pacific Edge slipped a further 4.32% to 13.3c.

Other decliners were Fletcher Building, down 5c to $5.52; Accordant Group falling 8c or 6.35% to $1.18; and Enprise Group shedding 4c or 6.25% to 60c.

Fonterra Shareholders’ Fund gained 6c to $3.65, despite a big fall in dairy prices at the latest Global Dairy Trade auction (GDT). But value-added products such as cheese were largely unaffected, and the fund benefits from increased profit margins.

The GDT index was down 4.3% overall, with whole milk powder falling 8% to an average of US$2864 (NZ$4690) a tonne, a price not seen since June 2020.

In the wine export sector, Delegat Group was up 20c or 2.16% to $9.45, and Foley Wines gained 3c or 2.46% to $1.25.

Freightways was up 9c to $8.79; Winton Land rose 19c or 7.88% to $2.60; Marsden Maritime Holdings gained 6c to $5; Rakon increased 5c or 6.67per cent to 80c; and Metro Performance Glass added 0.007c or 3.89% to 18.7c.

Good Spirits Hospitality, unchanged at 2.4c, is selling its nine bars and restaurants, including The Cav and Danny Doolans in Auckland and Cock & Bull in Hamilton, to Brew on Quay for $20.7m.

Following the sale, Good Spirits will delist from the NZX exchange. Fellow hospitality group Savor was up 1c or 3.13% to 33c.

Utility pole measurement provider ikeGPS increased 5c or 7.14% to 75c after announcing it has bought Marne & Associates’ National Electric Safety Code training business for an undisclosed amount.

TruScreen, unchanged at 2.5c, told the market its artificial intelligence-driven technology for cervical cancer screening has been recognised in China’s medical guidelines.

The optoelectrical technology was included in the Chinese Society for Colposcopy and Cervical Pathology’s July edition of the Clinical Gynaecology and Obstetrics journal.

Tags: Market Close