Calm before the storm: NZ sharemarket up 0.5%

The New Zealand share market rose for a second day running as markets took a deep breath in anticipation of the US presidential election.

Tuesday, November 5th 2024, 6:25PM

by BusinessDesk

The S&P/NZX 50 Index rose 67.705 points, or 0.54%, to 12,627.01. Across the main board, 66 stocks fell, and 67 rose. Turnover reached $106.1 million, with six companies trading on volumes of more than a million shares.

Forsyth Barr director of institutional equities Peter Sigley characterised the day’s trading as “fairly subdued” ahead of what is expected to be one of the closest US presidential elections in history.

“Volumes are very light, markets are distracted by the US election, and a little bit distracted by the Melbourne Cup,” he said.

Sigley said several stocks in the index have reasonable exposure to the US market.

“Either through sales such as Fisher & Paykel Healthcare or actual operations on the ground like Kathmandu, Mainfreight and THL,” he said. “We'll step back; markets do whatever they do on the back of election,” he added.

Movers

There were no material announcements on Tuesday on the NZ Exchange (NZX).

Air NZ recorded a second positive day, gaining 2.88% to $0.53, though the national carrier remains down 11% this year.

Gentailers Meridian Energy and Mercury Energy rose 2.39% to $5.99 and 2.17% to $6.58, respectively; Ebos Group jumped 2.41% to $36.05.

Cooks Coffee marginally recuperated some of Monday's 10.71% decline, rising 2% to close out the day at $0.255.

Spark, up 0.68% to $2.97, dominated volumes, with over six million shares changing hands.

The second most traded stock by value was Infratil, which fell 0.86% to $12.64. Infratil acquired 100% of One in 2023 and competed directly with Spark in telecommunications.

Sigley said the market is currently anticipating Spark's departure from the MSCI Global Index and Infratil's entry into it, which partially explains the former's lacklustre performance of late.

Sigley said a notable decliner was a2 Milk, which fell 2.42% to $6.05. The fall, Sigley said, is likely due to some below-expectation marriage data in China, which signals a lower birthrate outlook and may impact sales.

“The company will provide a trading update in a couple of weeks at the annual general meeting, at which time we'll get a decent update in terms of exactly what they're saying,” he said. “So all bets are off until that until that time.”

Other decliners included Oceania Healthcare, down 3.7% to $0.78, and Heartland Group, which lost 1.98% to fall under $1.

Michael Hill made it into the bottom 10 two days in a row, falling 3.13% to $0.62.

Earnings season

The calm before the storm provided analysts with an opportunity to look towards the upcoming earnings season, which kicks off with Manawa Energy on Friday. The Australian banks are excluded from the season.

In a preview note released Tuesday, Forsyth Barr’s Aaron Ibbotson listed 22 companies that will report before the end of the month, most of which will post interim results.

Six of those companies are in the property category, and another two, Oceania Healthcare and Ryman Healthcare, are retirement village companies.

Ibbotson said Forsyth Barr is approaching the season with a "positive bias" despite economic conditions.

He said the upbeat outlook is driven by the Reserve Bank of NZ’s (RBNZ) 50 basis point official cash rate (OCR) cut, business confidence hitting a 10-year high, and proposed fast-track legislation for numerous major construction projects.

However, he said Forsyth Barr remains nervous, adding management may shy away from admitting to seeing green shoots due to previous premature signalling.

“The green shoots that appeared at the beginning of this year came back to haunt management.”

Sigley echoed the sentiment in his colleague's report, saying he’s interested to see disclosures.

“We think it could be quite a constructive reporting season as the market comes out of the worst of the economic conditions,” he said.

Tags: Market Close