NZ sharemarket lifts on economic data

New Zealand’s sharemarket rose with investors inspired by two sets of economic data showing a resilient labour market and fast-improving dairy prices.

Wednesday, February 7th 2024, 6:34PM

by BusinessDesk

The S&P/NZX 50 Index went as low as 11,867 in the morning, but at noon after the release of the latest employment numbers, the index climbed steadily to close at 11,952.17 up 23.47 points or 0.2%.

There were 59 gainers and 70 decliners over the whole market on increased volumes of 34.7 million share transactions worth $149.32m.

Unemployment in the December quarter increased 4% from the previous 3.9%, lower than the 4.3% expected by the market, and employment lifted 0.4% compared with the September quarter – stronger than the forecast of 0.2%.

Average weekly earnings, including overtime, for full-time employees increased 6.1% to $1,588 for the year ending December.

Mark Lister, investment director with Craigs Investment Partners, said the unemployment rate showed the labour market was a bit more resilient and the economy a little stronger than people expected.

“While inflation pressures are coming down there are still elements of strength out there which could make the Reserve Bank job harder. A cut in the official cash rate is less likely over the next few months, and the gradual slowdown looks like a soft landing rather than a sharp recession.

“We don’t want to see widespread job losses as the price to pay for getting inflation down. The economy is holding together, and people still have money to spend,” Lister said. “Investors are waiting for the deluge of company earnings this month.”

The latest global dairy trade auction index rose 4.2%, with prices up 30% on the August low. Whole milk powder increased 3.4% to US$3,463 (NZ$5,676) a tonne; skim milk powder up 4.6% to US$2758 a tonne; and butter rose 10.3% to US$6516 a tonne, its highest since April 2022.

Lister said the global index is now at more than a 12-month high and the Fonterra midpoint milk price forecast of $7.50 per kg/MS is likely to be increased.

“It sets the agriculture sector up for a good start to the 2024/25 season.”

On the local market

The renewed confidence in the dairy sector helped push a2 Milk up 20c or 3.75% to a seven-month high of $5.53. Fonterra Shareholders’ Fund was up 2c to $3.38, and Synlait Milk gained 1c to 83c.

Ebos Group was up 31c to $36.90; Mainfreight collected $1.12 to $70.33; Ventia Services increased 12c or 3.49% to a new high of $3.56; Cooks Coffee rose 3.5c or 13.21% to 30c; T&G Global gained 4c or 2.16% to $1.89; Third Age Health added 3.3c or 2.35% to $1.44; and Pacific Edge was up 0.006c or 6.32% to 10.1c.

In the energy sector, Meridian gained 14c or 2.52% to $5.70, and Mercury was up 9.5c to $6.89. Manawa, unchanged at $4.20, confirmed Clayton Delmarter as the new chief executive. He has held the interim role since September.

Fletcher Building, which reports its latest financial result next week, was down 7c to $4.17 after fending off speculation that it is considering a capital raise. Fletcher said the (Australian-based) news media report was inaccurate and is seeking to have the story removed.

AFT Pharmaceuticals rose 14c or 3.78% to $3.84 after announcing it has launched its intravenous Maxigesic pain relief medicine in the United States market through its licensee Hikma Pharmaceuticals.

The first commercial sale will trigger a US$6m fee to AFT and its Belgium development partner, Hyloris Pharmaceuticals.

Port of Tauranga was down 8c to $5.35; Heartland Group declined 6c or 4.38% to $1.31; SkyTV decreased 7c or 2.49% to $2.74; Green Cross Health fell 9c or 6.98% to $1.20; and Stride Property shed 3c or 2.17% to $1.35.

Rua Bioscience, up 0.002c or 2.06% to 9.9c, has formed a partnership with Canada’s Apollo Green and will provide medicinal cannabis strains for Apollo’s genetic library that includes more than 1000 cultivars. Apollo has sales channels in Europe, North America and Australasia.

Truscreen Group, up 0.001c or 3.85% to 2.7, told the market it had gained approval to expand its cervical cancer screening in Mexico to the public health sector instead of just private clinics.

Tags: Market Close