NZ Sharemarket Traded Flat, Up Only 0.1% After Surge

The New Zealand sharemarket traded on a flat note following the strong gains the day before, spurred on by the two-week Middle East ceasefire agreement.

The S&P/NZX 50 Index did have a short spurt, reaching an intraday high of 13,425.82 at midday, but fell during the afternoon and closed at 13,273.81, up 19.87 points or 0.15%.

There was, however, a late rise in the brokers’ matching session, and the index has fallen about 2% so far this year.

On the main board, there were 59 gainers and 71 decliners, with 39.5 million shares worth $132.7m changing hands.

'We have passed the worst'

A modest day was expected after the excitement of Wednesday’s action and market strength. Australia is flat, Japan is down a bit, and US futures are pointing to a down day (overnight) on the markets. It’s a case of markets looking for further evidence of sustained de-escalation (in the Middle East) and oil prices staying where they are or falling further. While optimism is high that we have passed the worst, it’s still a fragile situation for markets. Hopefully, we will see more stability in the markets, and investors should be happy with flat days after all the volatility over the last five to six weeks.

There was a ceasefire uncertainty with Israel continuing to attack Hezbollah targets in Lebanon and saying that wasn’t part of the agreement.

Iran said three clauses in the agreement had already been violated and oil tanker traffic through the Hormuz Strait was halted, after two tankers were allowed through earlier. But talks between the US and Iran will take place in Pakistan this weekend.

Before all that, Wall Street had one of its better days. The Dow Jones Industrial Average surged 1,325 points or 2.85% to 47,909.92 – its best trading day since April last year, when US President Donald Trump first backed down from the severity of his initial trade tariffs.

The S&P 500 increased 2.51% to 6,782.81 points, and the technology-heavy Nasdaq Composite rose 2.8% to 22,634.99. Rocket Lab was up 4.16% to US$69.08 (NZ$118.38).

The oil price increased slightly, with Brent Crude trading at US$97.13 a barrel, up 2.5%.

The oil price was key to the Reserve Bank of NZ’s actions later this year. The central bank held the Official Cash Rate at 2.25% on Wednesday.

It is hoped that the Reserve Bank sticks to plan A with no rate rises this year. For this to happen, we need to see oil prices come back further and stay low.

There are so many unknowns, including a greater chance of rate hikes this year – most are picking September for a potential first one. But that will not do us a lot of favours.

The economy is still fragile. It doesn’t feel like the economy is strong enough to handle another rate-hiking cycle.

Hopefully our market would gain 5-10% this year, but that is dependent on the economic recovery. The recovery is at risk depending on where the oil price goes.

Local stocks

There were a few major moves on the local market. Freightways declined 35c or 2.64% to $12.90; fuel terminal operator Channel Infrastructure was down 10c or 3.28% to $2.95; Vista Group increased 6c or 3.49% to $1.78; and The Warehouse rose 4c or 5.88% to 72c.

Fisher and Paykel Healthcare was up 37c to $39.33; Infratil increased 20c to $12; a2 Milk gained 14c to $11.35; Mercury Energy added 6c to $6.50; and Briscoe Group improved 10c or 2.37% to $4.50.

Ebos Group was down 26c to $22.75; Ryman Healthcare decreased 5c or 2.29% to $2.13; Gentrack declined 20c or 2.99% to $6.50; Vulcan Steel fell 29c or 4.06% to $6.85; and Tower shed 6.5c or 3.28% to $1.91.

Other decliners were PGG Wrightson down 4c or 1.83% to $2.15; Bremworth shedding 2c or 2.94% to 66c; Third Age Health decreasing 9c or 1.84% to $4.80; Scales Corp falling 19c or 3.07% to $6; and Air NZ down 1.5c or 3.16% to 46c.

California-based electronics company Bourns now has an 80.36% stake in takeover target Rakon, with the offer at $1.55 a share closing on May 7. Rakon’s share price was down 0.005c to $1.49.

Santana Minerals, down 3.5c or 3.93% to 85.5c, has raised a further $17.04m and completes a $157m placement.

New Talisman Goldmines, down 0.001c or 6.25% to 1.5c, has raised $1.3m after the shortfall from the rights offer was placed, fetching a further $27,842.

Source: BusinessDesk

Ahead of the local open SPI futures were 1 points lower at 8975.

- close [Morningstar with AAP]: Australia's share market has edged slightly higher, as a fragile ceasefire between the US and Iran hangs in the balance and a key oil transit route remains restricted.

The S&P/ASX200 rose 21.4 points on Thursday, up 0.24 per cent, to 8,973.2, as the broader All Ordinaries edged 3.2 points higher, up 0.03 per cent, to 9,168.9.

Oil prices rebounded and growth stocks sold off, as the US and Iran accused each other of shifting the key tenets of a two-week truce, and as Israel escalated its attacks on targets in Lebanon, killing more than 250 people.

"It has been a day of consolidation at the index level, and probably rightly so after yesterday's rally and with growing questions around the details of the deal, which has been the bedrock of that ceasefire agreement," IG market analyst Tony Sycamore said.

"Markets will probably give the ceasefire the benefit of the doubt and look through some of the differences, as long as we start to see some of these ships get through the Strait of Hormuz."

Peace talks between Iranian and US officials are set to begin in Pakistan on Friday, which will be Saturday in Australia.

The bourse's modest improvement came with only four of 11 local sectors trading higher, with energy stocks and financials doing some heavy lifting, while IT, health care and consumer discretionary stocks came under pressure.

Oil and gas giant Woodside jumped almost four per cent, while Santos was close behind as the West Texas crude oil benchmark rebounded from as low as $US90.50 a barrel to $US97 by the ASX close.

The benchmark was trading above $US111 ahead of the US-Iran truce on Wednesday.

Mega miners BHP, Rio Tinto and Fortescue were mixed as iron ore futures dropped sharply to $US105.20, as China reported record stockpiles.

Gold miners were broadly lower, as the precious metal eased to $US4,717 ($A6,706) an ounce.

Local banks were surprisingly strong, and provided a ballast to weakness elsewhere in the bourse, as Bendigo Bank rocketed eight per cent higher on the back of a strong trading update, new tech deals and planned job cuts, while the big four also won some interest.

Packaging giant Orora was the top-200's worst performer, tumbling 18 per cent after downgrading its guidance due to Middle East conflict impacts.

The Australian dollar is buying 70.39 US cents, down from 70.70 US cents on Wednesday at 5pm.

Even under a best-case scenario for the US-Iran ceasefire and a reopening of the Hormuz Strait, it would takes months for oil markets to return to normal, AMP chief economist Shane Oliver said.

"It's going to take time to reopen the oil extraction operations in the Gulf that were shut. It's going to take even longer for gas. The oil has to be loaded on ships, which then have to make their way around the world, including to Australia," Dr Oliver told AAP.

"In two months time you would start to see oil flow returning so that the feared shortages turn out to be short lived, or with the use of reserves headed off, and while petrol prices stay high for a period, they come down in the second half of the year and the global economy sort of dodges a bullet.

"That's probably the best outcome."

ON THE ASX:

The S&P/ASX200 gained 21.4 points, or 0.24 per cent, to 8,973.2.

The broader All Ordinaries rose 3.2 points, or 0.03 per cent, to 9,168.9.

The NZX 50 added 14.32 points (0.11%) to 13288.13

[Morningstar with Dow Jones]:

U.S. stocks ended higher. The DJIA added 0.6% to 48,185.80, the S&P 500 lifted 0.6% to 6,824.66 and the Nasdaq added 0.8% to 22,822.42.

Among S&P 500 companies, the top three gainers were Brown-Forman Corp BF.B surging 12.76%, SanDisk Corp SNDK jumped 9.12%, and Constellation Brands Inc STZ lifted 8.40%.

The biggest decliners were Texas Pacific Land Corp TPL which dropped 15.60%, Axon Enterprise Inc AXON fell 10.28%, and ServiceNow Inc NOW lost 7.98%.

Asia

Chinese shares closed lower. The benchmark Shanghai Composite Index declined 0.7% to 3,966.17 and the Shenzhen Composite Index dropped 0.6% to 2,612.01.

Hong Kong shares ended lower. The benchmark Hang Seng Index declined 0.5% to 25,752.40.

Japanese shares ended lower. The Nikkei Stock Average slipped 0.7% to 55,895.32.

India shares ended lower. The BSE SENSEX slipped 1.2% to 76,631.65.

Europe

Stocks in the U.K. finished lower. The FTSE 100 Index declined 0.1% to 10,603.48. In Europe, shares closed lower. The Germany's DAX fell 1.1% to 23,806.99, and the France's CAC 40 dropped 0.2% to 8,245.80