NZ sharemarket down 1.6% for the week

The New Zealand sharemarket chalked up its fifth down day in a row – with retail jeweller Michael Hill providing a warning of a drop in earnings because of challenging trading conditions.

Friday, January 19th 2024, 6:35PM

by BusinessDesk

The S&P/NZX 50 Index slipped in the afternoon and closed at 11,666.07, down 21.11 points or 0.18% after reaching an intraday high of 11,737.56.

The index fell 1.6% for the week. There were 73 gainers and 51 decliners on the main board, with 34.2 million shares worth $101.2m changing hands.

David McConnochie, investment adviser with Forsyth Barr, said the local market has reflected the mixed performances overseas.

He said interest rates were still holding investors' attention – wholesale swap rates have crept up – and there is a stand-off between the markets and central banks over when they will start cutting official cash rates.

The United States and Australian markets have also had a run of down days but suddenly picked up. On Wall Street, the technology stocks re-ignited, and the Dow Jones Industrial Average was up 0.54% to 37,468.61 points; the S&P 500 increased 0.88% to 478709.94; and the Nasdaq Composite rose 1.35% to 15,055.65.

Across the Tasman, the S&P/ASX 200 Index had risen 0.99% to 7419.2 points at 5.45pm NZ time after five successive down days.

At home, Michael Hill was down 1c to 95c after expecting first-half earnings before interest and tax to be $30m-$33m compared with $54.4m in the previous corresponding period and gross margin in the 61-62% range, down from 65.2%.

NZ sales for the six months declined 10.3% to $65.4m, while Australia increased 10.2% to A$202.4m (NZ$218.22m), boosted by the new Bevilles business. The Canadian stores contributed C$88.3m (NZ$107.23m), up 0.6%, and total group sales were A$362.8m, up 4.1%.

The retail jeweller told the market that while the first half was definitely a challenging period with sales for the core Michael Hill brand down, “we are encouraged by our performance against the broader jewellery sector”.

Michael Hill said that higher input costs for gold and diamonds and more aggressive competitor behaviour have put trading margins under pressure.

Ryman Healthcare was down 13c or 2.22% to $5.72; Summerset gave up 16c to $10.45; Port of Tauranga declined 10c or 1.82% to $5.40; Tourism Holdings decreased 10c or 2.7% to $35.55; Comvita shed 5c or 2.08% to $2.35; and Restaurant Brands was down 7c or 1.79% to $3.85.

In the interest rate-sensitive energy sector, Meridian was down 9c to $5.46; Contact declined 8c to $7.96; Mercury shed 11c to $6.41; and Manawa was up 5c to $4.35.

NZ Rural Land Company rose 6c or 7.06% to 91c after announcing it has sold 25% of its portfolio to Australian investment manager Roc Partners for $44.2m. Some of the money will repay the $11.8m owing on a convertible note.

NZ Rural’s owner Allied Farmers increased 5c or 6.25% to 85c. Private Land and Property Fund increased 5.2c or 3.7% to $1.459.

Fletcher Building increased 10c or 2.15% to $4.75; SkyCity was up 5c or 2.75% to $1.87; Mainfreight collected 44c to $71.35; Ventia Services gained 7c or 2.1% to match its high of $3.40; Vulcan Steel added 19c or 2.43% to $8; and Hallenstein Glasson was up 11c or 2% to $5.62.

Global marketer a2 Milk gained a further 13c or 2.88% to $4.64 on the back of a better-than-expected Chinese birth rate for last year.

Synlait Milk, unchanged at 87c, has increased its forecast milk price for the 2023/24 season to $7.50 per kg milk solids, up from $7.25, because of improving dairy commodity prices.

Burger Fuel was up 2c or 7.14% to 30c. Burger Fuel earlier told the market that a shareholder had filed a notice of opposition in the high court to its plan to return capital to shareholders.

Other gainers were NZ Oil & Gas, adding 2c or 5.33% to 39.5c; ikeGPS up 3c or 6% to 53c; and Chatham Rock Phosphate increasing 1c or 9.09%t to 12c.

Tags: Market Close