NZ sharemarket takes late dive

The New Zealand sharemarket had a late dive, falling nearly 1% as investors took some profit following the recent rally.

Friday, June 7th 2024, 6:49PM

by BusinessDesk

The S&P/NZX 50 Index was having a choppy session before its sharp fall in the broker matching session.

The index closed at 11,856.56, down 116.44 points or 0.97% after reaching an intraday high of 11,973.01.

The index was flat for the week and is ahead 0.8% for the year. There were 58 gainers and 76 decliners over the whole market on volumes of 35.76 million share transactions worth $136.29 million.

Shane Solly, portfolio manager with Harbour Asset Management, said the market had a damp end to the week, giving back some of the earlier gains.

Interest rate cuts are now under way around the world. The European Central Bank (ECB) followed the Bank of Canada and reduced its official rate 25 basis points to 3.75% for the first time in five years. All eyes are now on the US Federal Reserve meeting next week.

ECB president Christine Lagarde said the inflation outlook had improved markedly and there was a strong likelihood that the central bank was moving to a dialling-back phase.

At home, ANZ Bank is now forecasting the first official cash rate cut in February next year, rather than May.

ANZ said the Reserve Bank's concern about the run of higher-than-expected domestic inflation is understandable, but “we expect that meaningful progress is around the corner. The real economy is very weak".

"By February next year, we are anticipating the Reserve Bank will have seen fourth-quarter CPI inflation at 2.6% (non-tradable still 4.7% year-on-year, but we are forecasting sub-4% the following quarter), and unemployment through 5%.

That should do it.” There was profit-taking in Fisher & Paykel Healthcare, down 50c to $30; Infratil declining 34c or 2.98% to $11.06; Auckland International Airport decreasing 13c to $7.67; and the leading energy stocks.

Meridian was down 17.5c or 2.7% to $6.30; Mercury declined 15c or 2.21% to $6.68; and Contact eased 14c to $9.20.

Skellerup declined 9c or 2.3% to $3.81, and Freightways was down 8c to $7.90.

Solly said Infratil reached an all-time high the day before on speculation that it will be included in a global index. Infratil has attractive long-term growth opportunities in data centres and renewable energy.

Mercury Energy told the market it is proceeding with the $486m expansion of the Kaiwera Downs wind farm near Gore following the long-term supply agreement for the Tiwai Point smelter.

The additional 155MW will power 73,000 homes a year, and when fully operational at the end of 2026 the Kaiwera wind farm will be the country’s second-largest, generating 198MW.

Solly said Mercury “is putting in some chunky investment, and on the back of the smelter announcement, could we be facing a green energy transition – it’s possible”.

SkyCity Entertainment recovered 3c or 2.04% to $1.50 after telling the market the Federal Court had approved an agreement with Australian Transaction Reports and Analysis Centre over Adelaide casino’s anti-money laundering breaches.

SkyCity is paying a civil penalty of $A67m (NZ$72m). Synlait Milk was down a further 2c or 5.19% to 36.5c as the market awaits its recapitalisation move. Fonterra Shareholders’ Fund declined 16c or 3.86% to $3.99.

Other decliners were Comvita down 3c or 2.31% to $1.27; NZX falling 4c or 3.64% to $1.06; South Port NZ shedding 10c or 1.75% to $5.60; and Seeka decreasing 6c or 2.39% to $2.45.

Kiwi Property was down 1.5c or 1.8% to 82c; Green Cross Health shed 4c or 4.12% to 93c; Accordant Group decreased 1.5c or 3.53% to 41; and Metro Performance Glass declined 0.003c or 4.35% to 6.6c.

Scales Corp, up 5c to $3.50, released a presentation on the growth opportunities of its global proteins division, which supplies eight of the top global pet food brands. Scales said pet food manufacturers are investing to meet customer demand and are looking to mitigate supply chain risks.

The global proteins division reached its 2023 operating earnings (ebitda) target in the 2021 financial year and is targeting $70m in the 2027 financial year.

Other gainers were Scott Technology up 7c or 2.94% to $2.45; Delegat Group increasing 10c or 2.22% to $4.60; Pacific Edge adding 0.006c or 6.32% to 10.1c; and The Warehouse collecting 3c or 2.8% to $1.10.

Tags: Market Close