NZ sharemarket down 0.5% as investors contemplate Trump 2.0

The spectre of new tariffs cooled the New Zealand sharemarket while the United States bourses celebrated Donald Trump's business-friendly presidential victory.

Thursday, November 7th 2024, 6:25PM

by BusinessDesk

While Wall Street went on a romp, the S&P/NZX 50 Index failed to hold onto mid-day gains and closed at 12,581.38, down 67.79 points or 0.54%, after reaching an intraday high of 12,696.35.

Trading volumes were steady, with 43.25 million shares worth $151.81m changing hands.

'Broad brush'

Mark Lister, investment director with Craigs Investment Partners, said while there’s lots of optimism about Trump’s policies for the US economy – he’s pro-growth and anti-regulation – there’s caution about what the potential tariffs mean for NZ.

“We are an exporting nation, and we depend on trading with the rest of the world, including the US. Our market wants more clarity on what the tariffs will look like and which products (exported to the US) will be affected.

“I don’t think Trump will go broad brush on everything; you might see more targeted tariffs,” Lister said. “But it’s a waiting game for the New Zealand economy.”

Local exporters, however, had a solid day on the market because the NZ dollar has fallen (it was trading at US59.81c against the American greenback), Lister said. The kiwi has weakened nearly 6% in the past month.

Speaking at Parliament’s Finance and Expenditure Committee, Reserve Bank NZ deputy governor Christian Hawkesby said the Trump presidency will be inflationary at the margins in the US but manageable.

Hawkesby expected increased tariffs on imported goods, tax cuts, a loosening in regulations and reduced immigration.

“On the margin, it’s a higher inflation package than the alternative, but one that’s very much manageable in the world of operationally independent central banks,” he said.

Trump’s landslide in a decisive election result took the uncertainty out of the US markets. They raced to new record highs with the Dow Jones Industrial Average surging 1508.05 points or 3.57% to 43,729.93 – its best day since November 2022.

The S&P 500 Index was up 2.53% to 5,929.04 points, and the Nasdaq Composite rose 2.95% to 18,983.46.

Local stocks

Back home, unemployment in the September quarter increased to 4.8%, up from 4.6% in the previous quarter.

Annually, the number of unemployed people increased by 24.2% to 144,900 (not seasonally adjusted). Annual wage inflation decreased to 3.8%, from 4.3% in the June quarter, and the labour force participation rate was 71.2%, down 0.5 percentage points over the quarter and 0.8 percentage points over the year.

It was the last piece of the puzzle for the Reserve Bank when it meets on Nov 26 to make its latest decision on the official cash rate (currently at 4.75%).

“There’ll be a 50-basis points reduction, and I don’t think Trump will affect that," Lister said.

Exporters Fisher and Paykel Healthcare was up 41c to $36.40; Gentrack gained 25c or 2.54% to $10.10; Mainfreight collected 80c to $71; and Serko added 10c or 2.6% to $3.95. But Sanford was down 12c or 3.12% to $3.73.

Global marketer a2 Milk, with main markets in China and the US, was down a further 18c or 3.06% to $5.71, back at the same price six weeks ago. In between a2 Milk reached a high of $7.16.

Infratil, which is being added to the MSCI Global Index on Nov 25, was down 36c or 2.79% to $12.53.

Ebos Group declined 95c or 2.57% to $36.05; Chorus was down 21.5c or 2.43% to $8.63; KMD Brands decreased 2c or 4.35% to 44c; The Warehouse eased 3c or 2.86% to $1.02; and Vulcan Steel fell 85c or 9.71% to $7.90.

Other decliners were Eroad, falling 3c or 3.19% to 91c; Sky TV, falling 5c or 1.83% to $2.68; Foley Wines, down 3c or 4% to 72c; Smartpay, decreasing 2.5c or 3.45% to 70c; and Santana Minerals, easing 3.5c or 4.86% to 68.5%.

Mercury Energy gained 10c to $6.60; Seeka increased 13c or 4.69% to $2.90; and Tower collected 3c or 2.29% to $1.34.

NZX continued a recent run, rising 5c or 3.45% to $1.50. Lister said the NZX Smart and other managed funds were exposed to growth in international markets.

Ventia Services increased 10c or 2% to $5.10; 2 Cheap Cars was up 4c or 5.13% to 82c; and Radius Residential Care gained 0.009c or 5.26% to 18c.

Air NZ, unchanged at 53c, reported a 7.3% reported a decrease in passengers carried to 1.485m in September, from 1.602m in the same month last year, because of a reduction in capacity resulting from aircraft availability.

Domestic passengers totalled 948,000, down from 1.051m; Tasman Pacific was 354,00, down from 361,000; and long haul was 183,00, down from 190,000. The passenger loading was steady at 82.2%.

Tags: Market Close