Fletcher dodges product recall in upbeat end to August for NZX 50

Fletcher Building shares rallied after avoiding a product recall over a leaky pipes issue in Western Australia, leading the benchmark stock index higher.

Friday, August 30th 2024, 6:37PM

by BusinessDesk

The S&P/NZX 50 Index rose 97.07 points, or 0.8%, to 12,447.68. Across the main board, 85 stocks gained, 46 fell and 48 were unchanged. Turnover was $318.2 million, with heavier trading due to the quarterly rebalancing of MSCI equities indices.

The benchmark index advanced 0.3% in August, getting a boost when the Reserve Bank cut its key interest rate earlier than some analysts had predicted and paved the way for further support to the ailing economy.

That helped ease some concerns about the domestic earnings season, which captured tough trading conditions for many firms. Economic indicators out this week such as consumer and business confidence surveys showed improving sentiment.

“There’s definitely an element of green shoots starting to come through,” said Shane Solly, portfolio manager at Harbour Asset Management. “We may be near the bottom, or we may have seen the bottom.”

Fletcher led the NZX 50 higher today, climbing 7% to $3.07 on a volume of 3.4 million. The building materials firm reached a tentative agreement with the Western Australia state government over fixing leaky pipes plaguing homeowners, avoiding a potential product recall.

The response was expected to cost Fletcher about A$155m (NZ$168.5m), although the deal didn’t include construction firm BGC, which has filed a claim against Fletcher subsidiary Iplex Australia.

Greg Smith, head of retail at Devon Funds Management, said there was relief that there wasn’t a product recall “It’s a solution, but it’s not a complete solution.”

Government data showing a pick-up in residential building consents in July was another tailwind for materials firms, with carpet-maker Bremworth advancing 4.7% to 45 cents and glass manufacturer Metro Performance Glass up 4% at 7.8 cents. Vulcan Steel rose 3.5% to $7.50 while Steel & Tube Holdings declined 2% to $1.

Companies exposed to the domestic economy were among the day’s stronger performers. SkyCity Entertainment Group climbed 4.9% to $1.49, Heartland Group Holdings rose 4.9% to $1.08 on a volume of 2.1 million, and Freightways gained 2.2% to $9.50.

Eroad posted the day’s biggest gain across the main board, rising 11.2% to $1.29 on a volume of almost 15,000 shares.

Fruit exporter Scales Corp posted the day’s biggest decline on the NZX 50, falling 5.3% to $3.40. The Kiwi dollar climbed about 6.1% in August, trading at 62.64 US cents at 5.30pm, crimping returns for companies that sell their products overseas and increasing the cost for visiting tourists.

Fonterra Shareholders’ Fund units declined 2.2% to $4.40, The a2 Milk Co slipped 0.7% to $6.08, Air NZ fell 1.8% to 54.5 cents on a volume of 1.6 million, and Tourism Holdings decreased 1.5% to $2.03.

Fisher & Paykel Healthcare rose 1.1% to $35.60 on a volume of 1.8 million. The medical devices maker last week upgraded its earnings guidance.

Spark NZ was the most heavily traded stock on a volume of 9.5 million, and it fell 2.5% to $3.59, matching the five-year low it hit this week. The telecommunications company missed its downgraded earnings guidance when it reported last week.

Harbour’s Solly said investors were wary of the capital costs for Spark’s planned datacentres.

Arvida Group rose 0.6% to $1.66 on a volume of 8.2 million, Meridian Energy advanced 1.3% to $6.34 on a volume of 5.6 million and Auckland International Airport increased 2% to $7.585 on a volume of 4.5 million.

Tags: Market Close