Sharemarket creep higher as rate review, earnings come into focus

Vista Group International led the benchmark index higher as the local stock market joined a stronger day across Asia, with investors eyeing up a potential rate cut later this year before the earnings seasons kicks up a gear.

Monday, August 12th 2024, 7:05PM

by BusinessDesk

The S&P/NZX 50 Index rose 37.79 points, or 0.3%, to 12,281.25. Across the main board, 82 stocks gained, 56 fell, and 41 were unchanged. Turnover was $71.1 million in relatively quiet trading, with just four companies trading on volumes of more than a million.

Vista rose for a fourth session, up 5.2% at $3.02. The cinema software developer was one of the first companies to report this season, narrowing its first-half loss and fattening its margins while pointing to successful franchise movies set for release in the second half of the year.

Earnings seasons doesn’t hit its stride until next week, and Wednesday’s monetary policy review will be keenly watched to see whether the Reserve Bank cuts the official cash rate. Market pricing predicts a reduction is likely, although economists are more circumspect in their forecasts, with the NZ Institute of Economic Research’s shadow board today saying it was divided on the central bank should ease this week.

“The markets are biding a bit of time as we wait for the Reserve Bank and the financial reporting season when we’ll start to see some of those results coming through,” said Grant Williamson, a director at Hamilton Hindin Greene.

Property stocks

The high-interest rate environment has weighed on property stocks, and Williamson noted that several of them traded at significant discounts on their asset backing.

Kiwi Property Group was unchanged at 90 cents, Goodman Property Trust slipped 1.5% to $2.03, Precinct Properties NZ advanced 0.8% to $1.25, Argosy Property rose 0.9% to $1.085 and Stride Property was unchanged at $1.30.

PGG Wrightson was unchanged at $2 before reporting tomorrow. The rural services firm dialled back its guidance in April, and will be a barometer for the agricultural sector at a time when a number of processors are feeling the pinch of the energy crunch.

Rubber goods maker Skellerup is also due to report this week. It rose 3.2% to $4.50.

Fletcher Building advanced 0.7% to $3.12 after saying it sold its Tradelink plumbing business for A$160m (NZ$175m) to Metal Manufactures and would book an A$32.5m impairment when it reports its earnings.

Williamson said the sale was well-signalled to the market and didn’t attract a negative reaction.

Local retailers were mixed after a stronger-than-expected profit from Australia’s discount electronics chain JB Hi-Fi. Briscoe Group fell 1.1% to $4.45, Warehouse Group declined 0.8% to $1.19, KMD Brands rose 2.5% to 41 cents on a volume of 1.8m shares, and Hallenstein Glasson advanced 0.7% to $5.75. Michael Hill International was unchanged at 62 cents.

Power companies had a mixed day as wholesale electricity prices remained elevated. Mercury NZ posted the day’s biggest decline on the benchmark index, falling 2.1% to $6.44, while Genesis Energy declined 1.1% to $2.23.

Meridian Energy rose 1.3% to $6.30, and Contact Energy was up 0.8% at $8.38, while Manawa Energy continued to recover from last week’s earnings downgrade, rising 2.5% to $4.16 on a small volume. Infratil, which has a controlling stake in Manawa, slipped 0.8% to $10.57.

Arvida Group, which faces a takeover at $1.70 a share, remained heavily traded, with 2.4m shares changing hands as the stock rose 0.6% to $1.63. Spark NZ was unchanged at $4.32 on a volume of 1.3m, while a2 Milk Co gained 1% to $7.45 on a volume of 1.3m.

Ebos Group increased 0.1% to $36.11. The Australian Competition and Consumer Commission delayed its ruling on whether to allow a merger of Chemist Warehouse and Sigma Healthcare.

Move Logistics remained unchanged at 30.5 cents after settling a $3.7m claim of breaching a contractual obligation. The company said it would pay a confidential sum in instalments over the 2025 and 2026 financial years.

Tags: Market Close