Market close: Dairy prices, financial warnings weigh on NZX

Ryman's big Nellie Melba retirement village in Melbourne, now in lockdown. Photo / Ryman Healthcare

Lower dairy prices, a 'confusing' unemployment rate, a grim financial warning and a factory closure weighed heavily on a reluctant New Zealand sharemarket today.

As concerns mounted about a second wave of Covid-19 and what lies ahead for the economy, local investors stayed on the sideline and offshore buyers were selling leading stocks.

The S&P/NZX 50 Index slipped 14 points or 0.12 per cent to 11,757.72 on light trading. A total of 44.45 million shares worth $126.7 million were traded – a third less than the previous day. Fourteen stocks increased and 21 were down.

Rickey Ward, head of investment strategy group at JBWere, said the market was incredibly thin. "Trading volume has dried up and investors are positioning themselves for the results season ahead. They are taking less risk and will be looking for sustainable recovery and earnings.

"We've seen offshore investors taking their money back home, and the focus is back on yield rather than chasing (share price) growth."

Dairy product prices fell 5.1 per cent in the latest Global Dairy Trade auction, with whole milk powder, important for Fonterra, plunging 7.5 per cent to US$3003 a tonne, down $215/tonne from the previous auction.

Stats NZ reported unemployment declined slightly from 4.2 per cent to 4 per cent in the second quarter ending June 30. The figure bemused the market with commentators expecting a rise to between 5 and 6.4 per cent.

They said measurement of unemployment was restricted during the Covid-19 lockdown. ASB senior economist Mike Jones said the labour market participation rate, under-employment and hours worked is the key to understanding why the unemployment figure has landed where it did, after one of the weirdest quarters in New Zealand's economic history.

Sir John Key, former Prime Minister and chairman of ANZ Bank New Zealand warned the equity and property markets were presently cushioned by record-low interest rates and healthy surface-level business activity and masked an underlying economic crisis the country would feel for years.

"There is a lot of stress in the system ... we are in the early part of what is going to be a very significant contraction in the New Zealand and global economy," Key told delegates at an Auckland summit.

Sanford said it was closing its Tauranga fish processing plant as volume has dropped significantly in the North Island, and the move will likely result in 65 job losses. Sanford's share price fell 10c to $6.35.

Spark announced it was increasing its Spark Sport monthly subscription from $19.99 to $24.99 from September 16 and its share price fell 5.5c to $4.92. A hefty $11.46m worth of its shares were traded.

Ryman Healthcare slipped a further 13c to $12.77 after saying earlier this week construction at three retirement villages in Australia had slowed. More than 50 per cent of Ryman's development is centred on Australia which is experiencing a Covid second wave.

There was heavy trading in Fisher and Paykel Healthcare and a2 Milk, the centre of attention for overseas investors. Just over $28m worth of Fisher and Paykel Healthcare shares changed hands, with the price falling 23c to $36.95, and a2 Milk was up 17c to $21.28 on $7.35m worth of trading.

TruScreen was one of the day's biggest movers after announcing it has appointed leading medical devices firm Aspironix to distribute its cervical screening technology in Czech Republic, Slovakia and Poland, a market of 18m women. TruScreen rose 1.5c or 21.43 per cent to 8.5c.