NZ sharemarket plunges to lowest level in six months

The New Zealand sharemarket plunged to its lowest level in six months as the weak economy continues to dampen investors’ appetite.

Wednesday, May 15th 2024, 6:44PM

by BusinessDesk

After a steady morning, the S&P/NZX 50 Index fell sharply in the afternoon and closed at 11,525.88, down 92.21 points or 0.79%.

The index has already fallen nearly 2% this week and is down 2.14% for the year to date. The previous lowest level was 11,475.77 points on Dec 13.

Matt Goodson, managing director of Salt Funds Management, said following The Warehouse, Tourism Holdings, and Fletcher Building earnings downgrades, investors now have a real aversion to stocks with a large exposure to the NZ economy.

“There is a very clear concern – some may say it’s a bit late – about domestic-driven earnings in the short term. The market is supposed to be forward-looking, but at the moment, it is reacting to very weak evidence about the economy.

“The market is soggy across the board,” Goodson said. “They say it’s always darkest before the dawn, and maybe the market is reaching its bottom – but it needs inflation lower so the Reserve Bank can start cutting interest rates.”

The latest data showed annual growth in card spending slowed to 2.5% in April, continuing the trend since the border reopened following the covid lockdown.

ANZ said expenditure on durable goods and clothing continued to lag, and pressure is mounting on consumers’ discretionary spending. The impetus from tourism-related spending was starting to wane, and miscellaneous services were the only category gaining momentum.

In the United States, the producer price index was higher than expected, up 0.5% in April and 2.2% for the past year. Economists expected 0.3%. But the March gain of 0.2% was revised to a decline of 0.1%, easing concern about stubbornly high prices.

US Federal Reserve chair Jerome Powell reiterated that patience was needed on the timing of interest rate cuts.

This didn’t stop the Nasdaq Composite reaching an all-time high after gaining 0.75% to 16,511.18 points. The Dow Jones Industrial Average was up 0.32% to 39,558.11 points, and the S&P 500 gained 0.48% to 5,246.68.

Local market

At home, Ebos Group declined 25c to $34.75 on trade worth $16.37m after falling out of the MSCI Large Cap Index. The move takes place at the end of the month.

Fletcher Building was down a further 12c or 3.97% to $2.90 – its lowest level since October 2002.

Hitting new all-time lows were KMD Brands, down 2.5c or 5.38% to 44c; the Warehouse, decreasing 3c or 2.48% to $1.18; and PGG Wrightson, declining 8c or 4.85% to $1.57. Delegat Group fell 17c or 3.03% to an eight-year low of $5.44.

Fisher and Paykel Healthcare was down 25c to $28.55; Summerset Group shed 23c or 2.24% to $10.05; Spark fell 11c or 2.56% to $4.18; Meridian Energy eased 6c to $6.01; Scales Corp declined 7c or 2.22% to $3.08; and Smartpay was down 2.5c or 1.91% to $1.285.

Other decliners were Freightways, down 11c to $8; Skellerup shedding 9c or 2.33% to $3.78; Manawa Energy, decreasing 8c or 1.94% to $4.05; Vulcan Steel easing 19c or 2.59% to $7.15; Michael Hill down 2c or 2.94% to 66c; and Third Age Health giving up 4c or 2.53% to $1.54.

Infratil recovered 16c to $10.50; AFT Pharmaceuticals increased 6c or 2.31% to $2.66; Briscoe Group was up 9c or 2.19% to $4.20; and Marlin Global added 2c or 2.04% to $1.

Pacific Edge gained 0.005c or 5.56% to 9.5c; Steel & Tube improved 3c or 3.03% to $1.02; and PaySauce was up 1.5c or 6.12% to 26c.

Auckland International Airport, down 15c or 1.94% to $7.60, recorded an 8% increase in total passengers to 1.529m in April compared with the same month last year, with international up 10% to 812,695 and domestic up 5% to 716,307. But total passengers were below 1.69m in March.

Takeover target Rakon, which provides frequency control and timing solutions, increased 11c or 12.79% to 97c after announcing a $17m contract over three years to supply oscillator subsystems for a new low earth orbit satellite constellation.

The company’s largest space contract will provide more than $3m of revenue in the 2025 financial year.

Tags: Market Close