Market close: Sharemarket etches out small gain after jobs data

Under-fire retirement village operators had positive days. Summerset Group rose 26c or 2.16 per cent to $12.32. Photo / File

An unexpected drop in the unemployment rate – showing the economy is rebounding strongly – provided good and bad news for the New Zealand sharemarket which etched out a small gain.

The S&P/NZX 50 Index seesawed in a 150-point range before finishing at 13,091.21, up 46.71 points or 0.36 per cent, after being ahead one per cent in the morning. The index hit a low of 13,023.09 and a high of 13,169.84 during the day on the back of the latest economic developments.

A total of 86.2 million shares worth $182.91 million were traded, and there were 88 gainers and 50 decliners over the whole market.

The announcement that the unemployment rate fell to 4.9 per cent for three months ending December, from 5.3 per cent in the previous quarter, set the tone of uncertainty. The market was expecting a rise to 5.6 per cent.

The NZ dollar strengthened to US72.26c against the American greenback and long-term wholesale interest rates continued to climb. Across the Tasman, the S&P/AX 200 Index was up 1.13 per cent to 6839.20 at 5.45pm (NZ time), and Wall Street had a strong day.

Matt Goodson, managing director of Salt Funds Management, said the strong employment numbers provided a mixed bag for the local market, as inflationary pressures build in the economy.

"The yield on long-term bonds increased 12-13 basis points – a 10-year government bond is now 1.25 per cent compared with 0.4 per cent in September – and the expectation of the Reserve Bank cutting the official cash rate is receding.

"Classical cyclical stocks, such as Fletcher Building, will benefit from the earnings of a rebounding economy but the dividend-yielding and growth stocks will find it more difficult, having relied on the low interest rates. Mind you, bank deposit rates are still low and investors still have limited alternatives," said Goodson.

Fletcher Building gained 15c or 2.38 per cent to $6.45 on trade worth $12.6m, and Fisher and Paykel Healthcare again dominated the trading, rising 56c to $33.70 on trade worth $30.39m.

Ebos Group increased 60c or 2.09 per cent to $29.30; Mainfreight was up 83c to $66.99, Chorus gained 11c to $8.71; Skellerup Holdings picked up 5c to $3.87; and Hallenstein Glasson was up 14c or 1.95 per cent to $7.33.

The retirement-village operators, under fire from a consumer watchdog group for their purchase arrangements with residents, had positive days – Summerset Group Holdings rose 26c or 2.16 per cent to $12.32; and Ryman Healthcare gained 2c to $15.77.

The energy stocks had another volatile day. Contact was down 16c or 1.9 per cent to $8.25; Genesis slipped 3c to $3.85; Meridian closed 4c up at $7.14 after falling as low as $6.80 during the day; Trustpower gained 7c to $8.85; and Mercury edged ahead 1c to $7.15.

Goodson said the leading energy stocks are big components of the passive investment funds and inflows and outflows of funds have to be carried out – so the gentailers' prices are bouncing around.

Sky Network Television climbed 1.9c or 11.88 per cent to 17.9c after upgrading its earnings for the 2021 financial year. Further cost savings and improved satellite and streaming performance will push Sky TV's revenue to $695m-$715m (previous forecast $680m-$710m); operating earnings to $170m-$182.5m ($140m-$155m); and net profit to $37.5m-$45m ($20m-$30m).

The game might be over for Texas-based GameStop, which plunged 60 per cent to US$90 ($124.66) overnight after reaching a high of US$482 last week. Cinema chain AMC Entertainment, another struggling stock chased by the Reddit forum investors, fell 41.29 per cent to US$7.82. Some brokers put a restriction on how many shares can be bought in one trade.

Wall Street rallied as progress was being made on economic stimulus talks between President Joe Biden and Republican senators. The Dow Jones Industrial Average surged 475 points or 1.57 per cent to 30,687.48; S&P 500 Index was up 1.39 per cent to 3826.31; and Nasdaq Composite rose 1.56 per cent to 13,612.78.

The Nasdaq increased 43.6 per cent in 2020 for its fifth best year ever, while the S&P 500 rose 16.3 per cent and the Dow Jones added 7.2 per cent last year.