NZ sharemarket drifts lower amid sliding business confidence

The New Zealand sharemarket drifted lower as business confidence continues to slide and disinflation takes over.

Tuesday, July 2nd 2024, 6:25PM

by BusinessDesk

The S&P/NZX 50 Index was up and down all day and closed at 11,776.73, easing 12.65 points or 0.11% after reaching a high of 11,809.73 and a low of 11,748.63.

There were 77 gainers and 53 decliners over the whole market on volumes of 31.38 million share transactions worth $110.46m.

The NZIER’s June Quarterly Survey of Business Opinion showed a net 35% of firms expected a deterioration in the general economic outlook over the coming months on a seasonally adjusted basis.

A net 28% reported a decline in activity in their own business in the June quarter, up from the 24% seen in the previous quarter. A net 35% plan to reduce investment in buildings, while a net 27% are reducing investment in plant and machinery over the coming year.

NZIER said: “The decline in cost and pricing indicators suggests a further easing in inflation in the New Zealand economy. Pricing power is particularly weak in the building and manufacturing sectors, given the weak domestic demand.”

ANZ Research said the survey provided further confirmation that monetary tightening has done what it says. Indicators of spare capacity are in a deflationary state and widening, and firms’ costs and pricing indicators are now below their long-run averages.

Jeremy Sullivan, investment adviser with Hamilton Hindin Greene, said the weak business sentiment will be pleasing for the Reserve Bank and the latest data gives the green light for lower interest rates by the end of the year.

The local market has already priced in an official cash rate cut in November and another one by February. Sullivan said: “There is a disinflation trend around the world, and once the United States moves (to reduce rates), then we will follow quite quickly.”

Local market

At home, Fisher and Paykel Healthcare was down 56c or 1.87% to $29.39; Mainfreight decreased $1.15 to $68.10; AFT Pharmaceuticals fell 14c or 4.67% to $2.86; and Scales Corp declined 11c or 3.14% to $3.39.

Oceania Healthcare decreased 2c or 3.7% to 52c; My Food Bag was down 0.007c or 4.86% to 13.7c; and Tower declined 2c or 2.25% to 87c.

In the retail sector, Hallenstein Glasson declined 17c or 3.12% to $5.28; Briscoe Group was down 15c or 3.66% to $3.95; and The Warehouse decreased 2c or 2.04% to 96c.

Skellerup recovered 10c or 2.71% to $3.79; Port of Tauranga collected 9c or 1.87% to $4.90; Delegat Group surged 41c or 7.81% to $5.66; Colonial Motor Co increased 24c or 3.51% to $7.08; PGG Wrightson improved 8c or 4.52% to $1.85; and Ventia Services was up 9c or 2.18% to $4.21.

Leading banks Westpac and ANZ were up 40c to $29.70 and 50c to $31.30 respectively.

Other gainers were Serko improving 10c or 3.08% to $3.35; Private Land & Property Fund rising 5.8c or 4.44% to $1.365; Rakon adding 2c or 2.74% to 75c; Eroad increasing 9c or 8.65% to $1.13; and Blackpearl Group up 3c or 4.48% to 70c.

In the property sector, Stride was up 3c or 2.56% to $1.20; Kiwi increased 2c or 2.44% to 84c; and Precinct gained 2c or 1.76% to $1.155.

Scott Technology was up 13c or 6.5% to $2.13 after announcing two new European contracts worth $19m for its materials handling business.

Scott will automate palletising for four existing production lines and one new line at Danone’s Polish food and beverage plant. Scott is also enhancing automation for freezing and palletising operations at Cranswick Country Foods, a leading UK food producer, as well as palletising and wrapping shipments ready for delivery to customers.

Promisia Healthcare, unchanged at 0.001c, is launching a $3m capital raise next week at 0.001c a share. The company has the discretion to accept up to $1m in oversubscriptions.

Promisia delayed the purchase of Golden View and Ripponburn Lifestyle Villages in Cromwell until Aug 14 and must satisfy the finance conditions by July 31. BNZ has offered to refinance $13.1m.

New Talisman Gold Mines, unchanged at 2.3c, came out of a trading halt after telling the market that it has arranged additional loan facilities that provide “sufficient comfort to issue a revised unqualified audit report.” It is now planning a capital raise.

New Talisman director Richard Tacon increased his unsecured loan to the company from $300,000 to $350,000 with an interest rate of 19% and final payment due Dec 31 next year.

Shareholder Hamish Brown and chair Samantha Sharif have provided unsecured loans of $850,000, and a minimum of $50,000 and up to $200,000 respectively on the same interest rate and repayment terms.

Tags: Market Close