Market Announcements
Market Summary
Fonterra’s shares rallied Friday after the co-op announced that it planned to sell its consumer business to French dairy giant Lactalis, while the broader sharemarket ended weaker, driven by a decline in market leader Fisher and Paykel Healthcare. The S&P/NZX 50 Index closed 151.31 points (1.15%) down at 13,042.76, with 63.9 million shares, worth $144.3m trading. There were 90 falls and 48 rises on the main board.
International investors were focused on what US Federal Reserve governor Jerome Powell’s message would be at the weekend’s symposium at Jackson Hole, Wyoming.
Fisher and Paykel Healthcare (FPH), which has the most significant bearing on the S&P/NZX 50 Index, ended 80c or 2% down at $37.65 after a strong run on Thursday. At last week’s annual meeting, FPH said its outlook for the full year remained unchanged, with operating revenue in the range of $2.15 billion to $2.25b and net profit after tax in a range of $390m to $440m.
Fonterra’s shares, which can only be owned by farmers, rallied by 98c to $6.00 while the units, which are open to individual investors, gained 19c to $7.15 after the divestment news. At $3.845b, the purchase price was well over market expectations and would count as one of NZ’s biggest ever corporate transactions. The market took some encouragement from Fonterra’s sale, which will put $3.2b or $2 a share into farmers' pockets if it goes ahead. “It looks to be a pretty good deal,” Hamilton Hindin Greene investment adviser Jeremy Sullivan said. “It was a very competitive bidding process, and it certainly came out at the top end of analyst expectations. “A tax-free capital return at $2 a share, that’s a decent amount of money that’s going back into the farmer’s back pocket. Lactalis is paying top dollar for these assets, and it gives them the ability to build their own brands in this part of the world. “It shows why it’s much easier to go out and pay a premium for a brand than it is to build one and compete in the same market.”
Dairy was the theme of the day, with a2 Milk, had outlined an ambitious plan to buy Yashili NZ’s plant at Pokeno, gaining 7c to $9.75. Synlait Milk, which is about 20% owned by a2, gained 7c to $71c.
SkyCity Entertainment, which completed a capital raise despite opposition from Australian fund manager and cornerstone shareholder Allan Gray, dropped 20c or 22% to 71c. SkyCity raised $159m from a non-renounceable entitlement offer and $81m from a placement. In the long run, Sullivan said the Reserve Bank’s 25 basis point cut in the official cash rate to 3% this week would be supportive of the market, which has a high proportion of interest rate-sensitive stocks.
Source: Business Desk
Australian Market Report
Ahead of the local open SPI futures were 84 points higher at 9011.
- close [Morningstar with AAP]: Australia's share market has sold off a day after notching another record close, easing lower as it locked in three straight weeks of gains.
The S&P/ASX200 lost 51.7 points, or 0.57 per cent, to 8,967.4 on Friday, while the broader All Ordinaries shed 49.9 points, or 0.54 per cent, to 9,234.3.
While the local bourse hung on to some of the week's historic gains, all eyes are on the US Federal Reserve's Jackson Hole Symposium this weekend for hints of the central bank's appetite for interest rate cuts.
"It was fairly modest pullback today in the context of things," Capital.com senior market analyst Kyle Rodda told AAP.
"But, quite simply, the next cue is going to come from this speech, and we'll only know that about midnight tonight and then see how we open on Monday."
Seven of 11 local sectors finished the day lower, led by slumps in consumer staples, health care and real estate stocks.
Financials and consumer discretionary stocks outperformed over the week, each up more than four per cent following some impressive financial scorecards and green shoots of rebounding consumer confidence.
The big four banks were mixed, with Westpac up 0.7 per cent to $38.98 and CBA falling 0.6 per cent to $172.84, while NAB and ANZ traded either side of flat.
Both Westpac and NAB are trading at record highs while ANZ is roughly 9.0 per cent short of its peak set in 2015.
Buy-now, pay-later provider Zip Co was Friday's star performer, up more than 20 per cent to $3.75 after smashing earnings expectations and flagging a potential dual listing on the Nasdaq.
At the other end of the table was fast food chain Guzman y Gomez, which tanked more than 18 per cent after posting an operating loss in its US division and weak Australian sales growth.
The materials sector finished the week 2.3 per cent lower, snapping a two-week streak.
The slide followed a grim quarterly earnings update wiped roughly a third from the value of fibre cement manufacturer James Hardie on Wednesday.
The healthcare sector was the week's worst-performing segment, falling 11 per cent after CSL announced plans to slash one in six jobs and close 22 US plasma centres, prompting a sell-off that wiped a fifth of its market value.
Real estate stocks slumped 1.8 per cent on Friday, but edged higher over the week, thanks to a stellar performance on Wednesday on the back of Stockland and HMC Capital's earnings updates.
The Australian dollar lost ground against the greenback, buying 64.19 US cents and trading at three-week lows as shrinking hopes of US interest rate cuts bolstered the US dollar.
ON THE ASX:
The S&P/ASX200 fell 51.7 points on Friday, or 0.57 per cent, to 8,967.4
The broader All Ordinaries lost 49.9 points, or 0.54 per cent, to 9,234.3
The NZX 50 added 77.26 points (0.59%) to 13120.02
Companies commencing Ex-Dividend Trading Today (ASX 300):
Hansen Technologies Limited
Magellan Financial Group Limited
Vicinity Centres
Overseas Market Report
[Morningstar with Dow Jones]:
U.S. stocks ended higher. The DJIA added 1.9% to 45,631.74, the S&P 500 gained 1.5% to 6,466.91 and the Nasdaq lifted 1.9% to 21,496.54.
Among S&P 500 companies, the top three gainers were Enphase Energy Inc ENPH surging 10.41%, Builders FirstSource Inc BLDR jumped 8.43%, and Mohawk Industries Inc MHK lifted 7.28%.
The biggest decliners were Intuit Inc INTU which dropped 5.05%, CSX Corp CSX fell 3.60%, and Cencora Inc COR lost 3.51%.
Asia
Chinese shares closed higher. The benchmark Shanghai Composite Index added 1.4% to 3,825.76 and the Shenzhen Composite Index added 1.5% to 2,393.21.
Hong Kong shares ended higher. The benchmark Hang Seng Index gained 0.9% to 25,339.14.
Japanese shares ended higher. The Nikkei Stock Average gained 0.1% to 42,633.29.
India shares ended lower. The BSE SENSEX fell 0.8% to 81,306.85.
Europe
Stocks in the U.K. finished higher. The FTSE 100 Index rose 0.1% to 9,321.40. In Europe, shares closed higher. The Germany's DAX gained 0.3% to 24,363.09, and the France's CAC 40 climbed 0.4% to 7,969.69
