Local shares hold up despite overseas slowdown worries

New Zealand stocks held up better than offshore markets as investors became wary of a global economic slowdown. At home, the Warehouse Group fell nearly 15% after knocking back a takeover proposal.

Friday, August 2nd 2024, 6:40PM

by BusinessDesk

The S&P/NZX 50 Index fell to a midday low of 12,326.9 before recovering to a close of 12,453.04, down 34.9 points or 0.28%.

The index was ahead 0.5% for the week. There were 92 decliners and 43 gainers over the whole market with 38.89 million shares worth $136.5m changing hands.

Shane Solly, portfolio manager with Harbour Asset Management, said weak economic data in the United States could be a risk for global economic activity and a potential recession – “and we have increasing geopolitical tension in the Middle East”.

He said the price of gold (US$2460 an ounce) has gone up again and “this tells you that investors are getting anxious".

In the US, initial jobless claims rose to 249,000, the highest since last August, and continuing claims jumped to 1.877m, the highest since November 2021.

The ISM manufacturing index was worse than expected at 46.8%, and a signal for economic contraction. The US 10-Year Treasury Note yield fell below 4% for the first time since February.

The Dow Jones Industrial Average was down 1.21% to 40,347.97 points; S&P 500 declined 1.37% to 5446.68; and Nasdaq Composite fell 2.3% 17,194.14. The Japanese Nikkei 225 Index had declined 5.5% to 36,029.9 points after the central bank lifted its official cash rate to protect its currency.

Across the Tasman, the S&P/ASX 200 Index was down 2.23% to 7933.7 points at 6pm NZ time.

The Warehouse Group fell 21c or 14.89% to $1.20 after pulling out of discussions with Australian private equity firm Adamantem Capital over buying all its shares at a price range of $1.50 to $1.70.

Warehouse chair Joan Withers said the current scheme of arrangement didn’t have the critical shareholder backing it needed to proceed. The board has not yet formed a view on value and was open to continuing discussions if a further proposal generated shareholder support sufficient to make its execution viable.

Solly said “when you get corporate proposals, there’s always some degree of uncertainty, and maybe more work needs to be done, who knows”.

Kiwi Property declined 1.5c to 89c after cancelling the contract for the conditional sale of the Vero Centre in downtown Auckland as a Hong Kong-based conglomerate failed to meet the terms of the purchase agreement. The purchaser failed to make a deposit and had not sought Overseas Investment Office approval.

SkyCity Entertainment was down 1c to $1.60 after announcing it will close the Auckland casino gambling area for five days from September 9 as part of the agreement with the Department of Internal Affairs. The full-year earnings impact will be about $5m.

Mainfreight was down 81c to $74.79; a2 Milk fell 17c or 2.17% to $7.65; Serko shed 10c or 2.7% to $3.60; Scales Corp declined 9c or 2.54% to $3.45; Sky TV decreased 8c or 3.04% to $2.55; and NZME was down 2c or 1.92% to $1.02.

Dual-listed banking groups ANZ declined 79c or 2.43% to $31.71, and Westpac fell $1.87 or 5.69% to $31.

Other decliners were My Food Bag, down 0.004c or 2.52% to 15.5c; Greenfern Industries falling 1.9c or 35.19% to 3.5c; Rakon decreasing 2c or 2.22% to 88c; Santana Minerals easing 8c or 5.48% to $1.38; and Accordant Group down 3c or 4.41% to 65c.

Ebos Group gained 58c to $36.60; AFT Pharmaceuticals increased 13c or 4.33% to $3.13 after holding its annual meeting; Steel & Tube improved 2c or 1.94% to $1.05; 2 Cheap Cars collected 3c or 3.45% to 90c; Eroad collected 5c or 3.91% to $1.22; and Blackpearl Group added 2c or 2.63% to 78c.

In the property sector, Argosy gained 2c or 1.89% to $1.08, and Stride rose 6c or 4.8% to $1.31.

AoFrio (formerly Wellington Drive Technologies) gained 0.004c or 6.15% to 6.9c after reporting a 27.4% increase in revenue to $38.4m for the half-year, and operating earnings of $1.1m, representing a $1.8m turnaround.

The company is maintaining its full-year guidance of $70m-$80m revenue, a 13% increase on the previous year, and ebitda of $2.5m.

Millennium & Copthorne Hotels NZ, unchanged at $1.76, earlier told the market that the removal of tax depreciation on commercial buildings will result in a one-off, non-cash adjustment of $26m, while CDL Investments, up 1c to 78c, said the Government move created an adjustment of $4m.

Tags: Market Close