NZ sharemarket continues to slide

The New Zealand sharemarket had its seventh successive fall as it continued to be battered by increased interest rates and a weak NZ dollar.

Monday, October 30th 2023, 6:22PM

by BusinessDesk

The S&P/NZX 50 Index recovered slightly in the afternoon and closed at 10,741.57, down 25.25 points or 0.23%.

The index has fallen in 10 of the last 12 trading days and is down more than 6.4% for the year.

There were 72 decliners and 50 gainers on the main board, and trading was again light, with 20.49 million shares worth $61.54m changing hands.

Jeremy Sullivan, investment advisor with Hamilton Hindin Greene, said the Israel-Hamas situation has created volatility in gold and oil prices, resulting in increasing inflation and interest rates, which are hurting the NZ market.

“We are also halfway through the (latest) United States reporting season, and 78% of the 245 companies on the S&P 500 were ahead of estimates. You can argue the earnings have been relatively robust.”

Gold, an alternative investment, has broken through the US$2,000 (NZ$3,433) market and was trading at US$2,001.37 an ounce at 6pm NZ time.

The NZ dollar traded at US58.26c against the American greenback after reaching an intraday low of US58.03c, and the cross-rate is now the third lowest in 20 years – it reached US55.9c in September last year.

Sullivan said the low dollar doesn’t help pay for oil imports, and prices will continue to stay high at the pump.

“Oil is a sticky commodity, and it means the Reserve Bank will hold interest rates higher for longer.”

Sullivan said the fixed interest market was sitting at 16-year highs. Bank term deposits for 12 months were more than 6%, and “you are getting returns you normally expect from shares while taking less risk".

“The local sharemarket is undergoing an orderly correction, but a lot of value in fundamentally sound companies is starting to appear,” he said.

In the United States, the S&P 500 and Nasdaq Composite indices have entered correction territory after falling more than 10% from their recent highs.

Back in NZ

At home, Fisher and Paykel Healthcare rebounded 35c to $20.80, but Mainfreight continued its slide, down 71c to $56.30. Mainfreight has fallen from a two-year high of $94.99 achieved on Dec 13, 2021.

Chorus declined 16.5c or 2.28% to $7.085; Freightways was down 10c to $7.50; and SkyCity Entertainment slipped 5c or 2.63% to $1.85.

ANZ Group was down 43c to $26.87, fellow banker Heartland Group decreased 4c or 2.55% to $1.53; PGG Wrightson shed 15c or 4.48% to $3.20; and Rakon fell 4c or 5.8% to a 33-month low of 65c.

The property sector was weaker, with Investore falling 4c or 3.36% to $1.15; Goodman Trust declining 4c or 1.99% to $1.97; Precinct decreasing 2.5c or 2.27% to $1.075; Vital Healthcare Trust down 4c or 1.99% to $1.97; and Argosy shedding 2c or 1.87% to $1.05. But Stride Property was up 3c or 2.36% to $1.30.

Air NZ increased 2.5c or 3.85% to 67.5c after telling the market that first-half earnings before taxation are expected to be $180m-$230m. This is based on an average jet fuel price of US$110 a barrel of crude oil.

The airline holds $200m in covid-related credits, and the expiry date for the credits has been extended to Jan 31, 2026, for booking travel through to Dec 31, 2026. Air NZ carried 1.6m passengers in September, an increase of 7.9% on the same period last year.

Synlait Milk rose 7c or 5.51% to $1.34 after making an investor presentation at its Pokeno processing plant, though no new material or a trading update was provided.

Tourism Holdings gained 6c or 1.82% to $3.35; Serko added 7c to $4.02; Sanford was up 10c or 2.67% to $3.85; The Warehouse collected 4c or 2.34% to $1.75; Smartpay improved 3.5c or 2.62% to $1.37; and Cannasouth increased 1.6c or 8.99% to 19.4c.

NZX, unchanged at $1, reported increased revenue for the third quarter to $27.84m, up 12.5%. Year-to-date revenue was $81.79m, up 15.3%.

The on-market value traded in the third quarter was $4.77 billion, down 6.8%, and total trades fell 10.2% to 2.095m. But the daily average value traded was $135m, up 5.8%. The total capital raised was $2.966b, down 46.9%.

Ventia Services, unchanged at $3.03, announced a 12-month extension to its Australian Defence Department maintenance contract, worth an additional $550m. Ventia reaffirmed its full-year guidance of 7-10% growth in net profit and said it is tracking towards the top end of the range.

Channel Infrastructure, up 1c to $1.42, has launched a $75m offer for six-year fixed rate bonds, with the ability to accept $25m in oversubscription.

Tags: Market Close