NZ Sharemarket Resists The Bears

The New Zealand sharemarket again stayed calm yesterday as the latest Middle East conflict entered its fourth day following the American and Israeli missile strikes on Iran. The S&P/NZX 50 Index traded in range of 13,658.75 and 13,597.16 before closing at 13,620.21, down 36.44 points or 0.27%. Other markets offshore were worse off. There were 51 gainers and 80 decliners on the main board, with strong turnover reaching 47.56 million shares worth $158.15m.

Across the Tasman, the S&P/ASX 200 Index was down 1.42% to 9070 points at 6pm NZ time, and the Japanese Nikkei 225 had fallen 2.7% to 56,488.27. The US markets initially fell Tuesday but then recovered, with the Dow Jones Industrial Average down 0.15% to 48,904.78; the S&P 500 steady at 6881.62; and Nasdaq Composite up 0.36% to 22,748.86. The oil price continued to climb, with Brent Crude trading at US$79.67 a barrel, up 2.48%. Gold was up 1.67% to US$5366.43, and the NZ dollar steady at US59.42c against the American greenback.

There were few major moves on the local market, with a2 Milk leading the way after gaining 13c to $11.65, a five-year high. Fisher and Paykel Healthcare was down 23c to $41 on trade worth $26.52m; Auckland International Airport eased 12c to $9.03; Gentrack shed 21c or 2.62% to $7.80; and Vulcan Steel declining 35c or 4.35% to $7.70. Infratil was down 21c or 1.87% to $11.03 following the latest quarterly valuations for three of its portfolio companies – Longroad Energy decreased by US$3m (NZ$5.04m), Galileo down by 6.8m euros ($13.37m), and Mint Renewables up NZ$3m.

Rebounding after a sharp fall the day before, Tourism Holdings was up 12c or 4.88% to $2.58; Napier Port up 10c or 2.75% to $3.73; and Vista Group up 5c or 2.82% to $1.82. Contact Energy gained 15c to $9.35, and CDL Investments increased 4.5c or 5.77% to 82.5c.

Fletcher Building, up 8c or 2.32% to $3.53, told the market its subsidiary, Higgins Contractors, has signed the East Waikato, Bay of Plenty and Hawke’s Bay integrated delivery contracts to complete state highway maintenance for a 10-year term from next month.

Jewellery retailer Michael Hill increased 1c or 1.85% to 55c after posting a strong first half, with revenue up 3% to $371m and net profit rising 32% to $22.25m. The company said trading also improved in the first eight weeks of the second half – same store sales in Australia increased 6.5%, Canada 13% and NZ up 7.1%.

Scales Corp was down 12c or 1.95% to $6.03 after announcing two executive appointments. Geoff Smith, previously chief operations officer, becomes chief executive horticulture and logistics, and Charles Ferguson, moving from Synlait, is chief executive global proteins.

Cancer diagnostics company Pacific Edge was unchanged at 20c after signing a service agreement with Singapore General Hospital for its non-invasive Cxbladder tests. The hospital has 1m patients a year. Hospitality group Savor increased 2c or 11.11% to 20c after telling the market it has bank approval to pay a dividend of 2c a share in January next year so long as gross leverage hits the expected ratio. Its bank borrowings will be down to $7.5m at the end of April from a peak of $14.6m in 2021. Savor said trading improved 3% in the peak summer period, compared with the previous corresponding period, and is forecasting revenue of $55m-$56m and operating earnings of $7m-$8m for the year ending March, and rising to $9m-$10m in the 2027 financial year.

Source: Business Desk

Ahead of the local open SPI futures were 124 points lower at 8910.

- close [Morningstar with AAP]: Australian shares have tumbled as the deepening Middle East conflict heightens fears around spiralling energy costs and increasingly likely interest rate hikes.

The S&P/ASX200 dropped 123.6 points on Tuesday, down 1.34 per cent, to 9,077.3, while the broader All Ordinaries lost 133.4 points, or 1.41 per cent, to 9,297.2.

"The ASX200's taken an absolute thumping today as investors moved to batten down the hatches and locked profits after a good run higher after the February earnings season," IG market analyst Tony Sycamore told AAP.

The roughly 8.5 surge in crude oil prices - on the back of widening air strikes across the Middle East following US-led attacks on Iran over the weekend - had so far appeared restrained, the analyst said.

"Furthermore, you've got major energy producers and US allies Kuwait and UAE reported to have less-than-four to a week's interceptor missile stocks left, and that could leave more energy infrastructure very much, well, at the mercy of Iran," Mr Sycamore said.

Energy stocks were the only sector to finish clearly higher, as basic materials ran into profit-taking and consumer discretionaries were hit by a toxic mix of confidence-killing headlines.

One of which was a speech by Reserve Bank governor Michele Bullock, who said oil's inflation impact would have to be considered at its next rate-setting meeting.

"If it becomes clear the economy has evolved differently than our earlier expectations and that difference is likely to endure, then we adjust the stance of policy, which we did in February," she told the AFR Business Summit.

Interest rate markets narrowed their bets on a March interest rate hike from 10 per cent to one in three after the speech, and have fully priced in a 25-basis point rise by early May.

Recently red-hot mining stocks took a three per cent dive, marking the sector's first down session of the past seven as investors took profits on a multi-record-breaking run.

Gold stocks dipped as the precious metal eased over the session to $US4,344 an ounce, dragging the All Ordinaries gold sub-industry three per cent into the red.

With the exception of a minuscule lift in consumer staples, all sectors outside of energy were in the red, with especially deep dives for rate-sensitive segments real estate (down 2.1 per cent), IT (2.2 per cent) and consumer discretionary stocks (2.8 per cent).

The outlook for the local economy and stocks ultimately depended on the length of the conflict, AMP chief economist Shane Oliver said.

"The longer-term issue is the way higher oil prices have actually been associated with global recessions or debt or slow periods of growth, because it acts as a tax on spending," Dr Oliver told AAP.

However, Australia was in a comparably favourable position to many nations given its relatively low dependence on oil and as a net exporter of fossil fuels.

"Our national income will go up in response to higher energy prices, even though households don't get a boost directly," Dr Oliver said.

The Australian dollar is buying 70.88 US cents, up slightly from 70.77 US cents on Monday, handing back most of the day's gains after the ASX close.

ON THE ASX:

The S&P/ASX200 fell 123.6 points, or 1.34 per cent, to 9,077.3

The broader All Ordinaries lost 133.4 points, or 1.41 per cent, to 9,297.2

The NZX 50 Lost -80.35 points (-0.59%) to 13539.86

Companies commencing Ex-Dividend Trading Today (ASX 300):

EVT Limited

IDP Education Limited

Integral Diagnostics Limited

Monash IVF Group Limited

Netwealth Group Limited

Northern Star Resources Ltd

Pacific Current Group Limited

Qualitas Real Estate Income Fund

SGH Limited

Sigma Healthcare Limited

Sonic Healthcare Limited

Woolworths Group Limited

Worley Limited

[Morningstar with Dow Jones]:

U.S. stocks ended lower. The DJIA slipped 0.8% to 48,501.27, the S&P 500 declined 0.9% to 6,816.63 and the Nasdaq fell 1% to 22,516.69.

Among S&P 500 companies, the top three gainers were Workday Inc WDAY surging 7.16%, Best Buy Co Inc BBY jumped 7.08%, and Target Corp TGT lifted 6.74%.

The biggest decliners were SanDisk Corp SNDK which dropped 8.67%, Micron Technology Inc MU fell 7.99%, and Newmont Corp NEM lost 7.75%.

Asia

Chinese shares closed lower. The benchmark Shanghai Composite Index slipped 1.4% to 4,122.68 and the Shenzhen Composite Index dropped 3.2% to 2,655.81.

Hong Kong shares ended lower. The benchmark Hang Seng Index slipped 1.1% to 25,768.08.

Japanese shares ended lower. The Nikkei Stock Average declined 3.1% to 56,279.05.

India shares ended lower. The BSE SENSEX dropped 1.3% to 80,238.85.

Europe

Stocks in the U.K. finished lower. The FTSE 100 Index slipped 2.7% to 10,484.13. In Europe, shares closed lower. The Germany's DAX fell 3.4% to 23,790.65, and the France's CAC 40 dropped 3.5% to 8,103.84