NZ sharemarket extends gain as Westpac kicks off bank reporting

New Zealand’s sharemarket extended its rally for a fifth day as dual-listed Westpac kicked off the bank reporting season with an increased dividend and a share buyback.

Monday, November 6th 2023, 6:43PM

by BusinessDesk

The S&P/NZX 50 Index rose 142.3 points, or 1.3%, to 11,261.22, joining a rally that started on Friday when Wall Street gained on hopes the US Federal Reserve is done hiking interest rates after softer-than-expected employment figures. Of the 186 securities on NZX’s main board, 83 rose, and 56 fell on slightly lighter than usual turnover of $97.4 million.

“The strong start that we’ve had to November has continued after a pretty challenging couple of months in September and October,” said Greg Smith, head of retail at Devon Funds.

“Sentiment appears to have turned on a dime, or more to the point, the view that central banks – ironically apart from the RBA (Reserve Bank of Australia) – are likely done and dusted with their interest rate rise.”

Westpac was among the gainers, up 2.9% at $24.10 after the dual-listed bank delivered an increased dividend and A$1.5 billion (NZ$1.6b) share buyback. Its NZ business posted an 18% decline in net profit as its cost base grew at a faster pace than its income and as year-earlier benefits from the reversal of bad debts and the gain on selling Westpac Life washed through.

Other financial stocks to gain include ANZ Group, which will report on Nov 13, which rose 0.8% to $28.14 and Heartland Group Holdings, which holds its annual meeting on Thursday, which was up 3.1% at $1.66. ASX-listed National Australia Bank, the parent of Bank of NZ, reports on Thursday.

Smith said competition is still very intense with mortgages in both Australia and NZ.

While central banks around the world appear to be done raising interest rates, Australia’s central bank is expected to raise the target cash rate by 25 basis points on Tuesday.

Smith said the new Australian governor has a low tolerance for a slow return to bring the pace of inflation back to target, and markets are pricing in a 66% chance of a rate hike on Melbourne Cup day.

“A 25-basis-point rise is odds on favourite.”

Among NZ-listed companies with Australian exposures, Fletcher Building rose 1.6% to $4.52, SkyCity Entertainment was up 2.7% at $1.94, and KMD Brands advanced 3.5% to 90 cents.

Travel software firm Serko led the local benchmark index higher, rising 4.9% to $4.25 as a clutch of tech companies also rallied on Monday, with Pacific Edge up 4% at 10.4 cents, Vista Group advancing 3.9% to $1.35 and Fisher & Paykel Healthcare climbing 3.4% to $22.65.

Blis Technologies posted the biggest gain on the main board, up 15% at 2.3 cents in light trading, while Rua Bioscience advanced 9.2% to 13 cents, and PaySauce increased 5% to 21 cents.

Mainfreight posted the biggest decline on the main index, falling 5.7% to $57.50 ahead of reporting its first-half result on Thursday.

Smith said the logistics company was under pressure from shipping liner Maersk’s grim quarterly earnings report on Friday when it said it would cut 10,000 jobs – almost 10% of its workforce – as the pandemic-fuelled cargo boom subsided.

“They control one-sixth of global container trade, and they’re seen as an economic bellwether,” he said.

Move Logistics also fell, down 4.8% at 59 cents.

Metro Performance Glass, which spurned a takeover bid from its major shareholders in July, posted the biggest decline on the main board, falling 10.3% to 13 cents in relatively light trading.

Just four companies traded on volumes of more than a million shares, with Arvida Group unchanged at $1.15, Air NZ falling 0.7% to 67.5 cents, Spark NZ rising 1% to $5.06, and Auckland International Airport advancing 1.6% to $7.86.

Tags: Market Close