NZ market falls 1.7% this week as it stutters into earnings season

New Zealand’s stock market slipped into the red in late trading, rounding out a 1.7% decline this week as fears over the strength of the US economy injected volatility into global markets.

Friday, August 9th 2024, 6:42PM

by BusinessDesk

The S&P/NZX 50 Index fell 13.82 points, or 0.1%, to 12,243.46. Across the main board, 91 stocks gained, 43 declined, and 45 were unchanged. Turnover was $86.9 million in relatively light trading, with just six companies experiencing volumes of more than a million.

The week started with a bang on Monday when Japan’s Nikkei 225 experienced its biggest slump since 1987 amid fears that the US might be heading for a recession. As rising Japanese interest rates stoked, concerns about tech investments funded by a cheap yen were rapidly being unwound.

Global markets settled down through the week, and local investors turned their attention to the upcoming Reserve Bank of NZ (RBNZ) policy review and earnings season starting in earnest.

“Earnings season outlooks will be very closely watched and the Reserve Bank’s announcement next week,” said Jeremy Sullivan, an investment adviser at Hamilton Hindin Greene. “While we’re not expecting a cut next week, we’ll be focused on the dot plot for cuts and whether that will be in 2025 or later this year.”

Local market

Retailer KMD Brands led the benchmark index lower, falling 4.8% to 40 cents. Australian furniture retailer Nick Scali reported a 20% decline in annual profit across the Tasman, with high interest rates and rising prices discouraging shoppers.

Energy companies were mixed as they came to grips with spiking wholesale electricity prices in an environment with low hydro-lake levels. Grid operator Transpower said it would let hydro generators access backup storage earlier than in the current settings.

Meridian Energy rose 0.2% to $6.22, with 1m shares traded, and Genesis Energy advanced 3.2% to $2.255. Contact Energy declined 1.8% to $8.31, and Mercury NZ fell 1.6% to $6.58. Both Contact and Mercury are due to report their earnings later this month.

Manawa Energy, which this week downgraded earnings guidance over a disputed bill and the market conditions, clawed back some of Thursday’s losses, rising 3.1% to $4.06.

Sullivan said high prices were typically good for generators but that the hedging programmes in place made the financial impact somewhat opaque.

Rubber goods manufacturer Skellerup, scheduled to report on Thursday, fell 0.9% to $4.36. Steel & Tube Holdings declined 1.9% to $1.01, and Vulcan Steel slipped 1.4% to $7.01.

Fisher & Paykel Healthcare fell 1.2% to $32.50. The healthcare product maker's share price has been sensitive to new weight-loss injections such as Zepbound, whose maker, Eli Lilly, beat sales expectations when reporting overnight.

Among companies trading on volumes of more than a million shares, Stride Property rose 0.8% to $1.30 with 2.7m shares traded, Ariva Group slipped 0.6% to $1.62 on a volume of 2.3m, Spark NZ increased 0.2% to $4.32 with 1.4m shares changing hands, Kiwi Property Group advanced 2.3% to 90 cents on a volume of 1.1m, and SkyCity Entertainment Group declined 0.6% to $1.56 on a volume of 1.1m.

Vista Group International continued its strong run, rising 8.3% to a four-year high $2.87 as it posed the strongest gain on the benchmark index. This week, the cinema software company gained 18.6% after reporting wider earnings margins and demonstrating progress in signing customers to its software-as-a-service offering.

Rural services firm PGG Wrights, which reports on Tuesday, rose 0.5% to $2. The a2 Milk Co, due to report in two weeks, rose 2.8% to $7.38, while Synlait Milk gained 5.3%, or 1.5 cents, to 30 cents.

Sky Network Television, broadcasting the Olympic Games, rose 7.1% to $2.70 on a relatively light volume of 47,000 shares, while NZME advanced 4.1% to $1.02.

On Friday, global media giant News Corp said it plans to sell its 65% stake in Australian pay TV business Foxtel. Australia’s Telstra owns the balance.

Vital Healthcare Property Trust rose 2.4% to $1.91, clawing back some of Thursday’s losses when the healthcare property owner said a potential partnership was taking longer to complete over differing expectations. The company’s decline in earnings was in line with expectations.

(This story has been changed to correct the reporting dates for a2, Contact and Mercury.)

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