Market close: Sharemarket stages late surge

Fletcher Building shares had a bumpy ride after revealing its Australian subsidiary was under investigation for a leaky pipe product. Photo / Supplied

The New Zealand sharemarket staged a late surge, but Fletcher Building had a bumpy day after revealing its Australian subsidiary was under investigation for a leaky pipe product.

The S&P/NZX 50 Index was trading flat till the last 45 minutes when it shot up nearly half a per cent to 11,936.15, finally gaining 55.58 points or 0.47 per cent after reaching an intraday low of 11,826.51.

There were 77 gainers and 55 decliners over the whole market on volumes of 33.32 million shares worth $91.63 million.

The market is this week looking out for Thursday’s release of the March quarter consumer price index. ANZ Research expects annual inflation to be steady at 7.2 per cent - just below the Reserve Bank’s forecast of 7.3 per cent.

ANZ is predicting non-tradables (domestic) inflation to increase from 6.6 per cent to 6.8 per cent, and tradables (imported goods) inflation to fall from 8.2 per cent to 7.4 per cent.

“Our forecast is for a follow-up 25 basis points official cash rate hike in the May monetary policy statement, taking the rate to 5.5 per cent, which appears to be the [Reserve Bank] committee’s happy place where they can watch, worry and wait,” said the ANZ Bank.

Greg Smith, head of retail for Devon Funds Management, said the battle for the Reserve Bank is that inflation is not coming down quickly enough.

“It has been painstakingly slow and one of the contributors is food prices running at an annual increase of 12.1 per cent.”

He said markets were heartened by a solid start to the latest United States earnings season, with the banks reporting strong quarterly results – including JP Morgan Chase’s record revenue of US$39.3 billion ($63.42b).

The banks are not sounding too many alarms over the recent banking crisis, and investors have moved on, said Smith.

At home, Fletcher Building declined 7c or 1.51 per cent to $4.56 (reaching an intraday low of $4.42) after telling the market that its subsidiary company Iplex was being investigated by the Western Australian building regulator for leaky pipes.

Iplex Australia has increased its provision from A$2m to A$15m (NZ$16.23m) to support builders and plumbers who installed Pro-fit pipes found to be defective. About 1200 of the 15,000 houses built in Western Australia between mid-2017 and mid-2022 are believed to have been affected.

Smith said that on the face of it, the issue was “fairly immaterial” to Fletcher but there were unknowns about the end result.

“It’s not a big deal in terms of the numbers [A$15m provision] but there’s a question of whether it becomes a bigger problem and that’s what the market is nervous about.”

Smith said Fletcher is a cyclical name that is already trading at a big valuation discount because of the slowdown in the housing market.

Fisher and Paykel Healthcare was up 51c or 1.93 per cent to $26.95; Meridian Energy added 5c to $5.25; Spark gained 7c to $5.12; and Auckland International Airport increased 11c to $8.66.

Australian dual-listed stocks Ampol collected 68c or 2.08 per cent to $33.44; ANZ Bank added 53c or 2.06 per cent to $26.20; and Westpac was up 30c to $24.15.

Other gainers were Napier Port, up 9c or 3.37 per cent to $2.76; Colonial Motor Company adding 18c or 2 per cent to $9.16; Green Cross Health rising 5c or 3.7 per cent to $1.40; and MHM Automation increasing 3c or 3.19 per cent to 97c.

KMD Brands gained 3c or 2.75 per cent to $1.12; Hallenstein Glasson was up 7c to $5.38; NZME added 2c or 1.94 per cent; and Rakon increased 3c or 3.57 per cent to 87c.

In the retirement sector, Oceania Healthcare gained 2c or 2.86 per cent to 72c; Arvida Group was also up 2c or 1.92 per cent to $1.06; and Summerset Group was down 12c to $8.28.

Manawa Energy, down 1c to $4.92, reported that fourth-quarter generation volumes increased 55 per cent to 461GWh compared with the same period last year. North Island volumes were 88 per cent higher and South Island 24 per cent.

Manawa’s full-year generation is 9 per cent ahead of the previous corresponding period with 1917 GWh compared with 1760GWh.

Port of Tauranga declined 10c to $6.30; Marsden Maritime Holdings was down 12c or 2.27 per cent to $5.17; Freightways decreased 10c to $9.31; Heartland Group was down 3c or 1.85 per cent to $1.59; and Sky TV shed 5c or 1.88 per cent to $2.61.

Move Logistics shed 3c or 3.26 per cent to 89c; Scott Technology was down 9c or 3 per cent to $2.91; Gentrack declined 10c or 3.17 per cent to $3.05; Eroad decreased 2c or 3.32 per cent to 60c; and Millennium & Copthorne Hotels NZ was down 6c or 2.79 per cent to $2.09.