NZ sharemarket falls 1% ahead of long weekend

The New Zealand sharemarket fell 1% as business and consumer confidence weakened further, but inflation expectations were lower.

Thursday, June 27th 2024, 6:42PM

by BusinessDesk

The S&P/NZX 50 Index had a more volatile trading day and closed the shortened week at 11,717.43, down 117.58 points or 0.99% after a sharp dip in the end-of-day broker matching session.

The index declined nearly 3% in the June quarter.

There were 58 gainers and 66 decliners over the whole market on volumes of 53.16 million share transactions worth $188.58m.

Infratil, about to be upweighted in the index, dominated the trading with $37.58m worth of shares changing hands and gained 14.5c to $11.20.

The June ANZ Business Outlook survey showed confidence fell 5 points to plus 6 in June, and expected own activity was unchanged at plus 12, while past activity was flat at minus 18.

Pricing intentions fell 7 points to 35, cost expectations fell from 73 to 69, and inflation expectations eased from 3.6% to 3.5%.

ANZ said while the first quarter gross domestic product was (barely) respectable, the signals for the second quarter are extremely weak.

“We have pencilled in a small decline at this early stage.

“Both cost expectations and pricing intentions have now fallen off the plateau they were stuck on for 8-9 months, and inflation expectations also continue to steadily decline.”

ANZ-Roy Morgan Consumer Confidence eased 2 points in June – “at 83, confidence is miles below the 20-year average of 114.”

ANZ said the survey showed inflation expectations bounced from 3.8% back up to 4.2%. Expected house price inflation ticked up from 3.2% to 3.4%.

“Households’ inflation expectations are volatile but continue to trend lower,” ANZ chief economist Sharon Zollner said.

Shane Solly, portfolio manager with Harbour Asset Management, said bond yields went up in the United States, setting the tone for softer markets.

He said it was no surprise that business confidence in NZ has come down again, but inflation expectations have fallen, and the heat may be coming out of the inflation cycle.

“Is it time for the Reserve Bank to loosen its monetary policy? Or will it continue to administer its medicine? That’s the challenge for the bank.”

Solly said the latest company outlooks are cautious, but they are saying things are not getting any worse, which is helpful in the current economic environment. “It’s an important sign that maybe we are getting to the bottom of the cycle.”

Local market

Auckland International Airport was down 20.5c or 2.62% to $7.63; Mainfreight declined $1.05 to $67.63; Meridian Energy shed 20.5c or 3.16% to $6.29; Skellerup fell 18c or 4.57% to $3.76; Fletcher Building decreased 6c or 2.08% to $2.83; and a2 Milk was down 11c to $7.10.

In the retirement village sector, Summerset Group decreased 22c or 2.26% to $9.50; Ryman Healthcare declined 15c or 4.04% to $3.56; and Arvida Group fell 5c or 5.1% to 93c.

In the interest rate-sensitive property sector, Goodman Trust declined 5c or 2.43% to $2.01; Precinct decreased 3c or 2.62% to $1.115; and Investore was up 3c or 3% to $1.03.

Mercury Energy was down 14.5c, or 2.16%, to $6.565 after completing its $350m capital bonds issue, which carries an interest rate of 6.42% a year. The bonds will be issued on July 11, and the first reset date is July 11, 2029.

Genesis Energy, up 2c to $2.19, has downgraded its operating earnings (ebitdaf) for the 2025 financial year to $460m from $500m.

Genesis said the reduced gas supply from the Kupe field is expected to result in higher generation costs due to the increased use of higher-cost solid fuels such as coal. Genesis is independently verifying the Kupe reserves and expects the field-wide proved and probable reserves will be revised down by approximately 80 petajoule equivalents.

Port of Tauranga was down 16c or 3.28% to $4.72. Majority shareholder Bay of Plenty Regional Council is planning to sell-down its 54.1% stake to a minimum 28%.

Other decliners were Chorus, down 10.5c to $7.69; Gentrack, shedding 13c to $10.25; Sky TV, decreasing 5c or 2.08% to $2.35; Green Cross Health, falling 3c or 4.05% to 71c; Radius Residential Care, easing 1.2c or 6.12% to 18.4c; and Synlait Milk down a further 1.5c or 6.25% to 22.5c.

Rakon increased 3c or 4.48% to 70c after announcing its second contract to supply oscillator subsystems for a new commercial low earth orbit satellite constellation.

Other gainers were SkyCity, up 6c or 4.29% to $1.46; Winton Land, increasing 4c or 2.06% to $1.98; PGG Wrightson, improving 8c or 4.79% to $1.75; Scales Corp, adding 11c or 3.15% to $3.60; and Pacific Edge adding 0.006c or 6.67% to 9.6c.

Tags: Market Close