Market close: NZ stocks give back early gains to end lower

Shares in Vulcan Steel fell sharply after a down day on the sharemarket.

The New Zealand sharemarket’s five-day winning streak has come to an abrupt end, driven in part by weaker banking stocks.

The S&P/NZX50 index finished at 11,223.86, down 37.362 points or 0.33 per cent.

Turnover was a light $89.4 million and there were 71 falls and 61 rises among the 186 stocks traded.

The Reserve Bank of Australia’s (RBA) widely-expected move to hike its official interest rate by 25 basis points to 4.35 per cent had little impact on equity markets on either side of the Tasman, although the Aussie dollar dropped by a quarter of a US cent to US64.62c.

“At the end of the day, the RBA is behind the curve and they probably need to go twice in the next few months,” Salt Funds managing director Matt Goodson said.

“We [the Reserve Bank of NZ] should be done, the US Federal Reserve seems to be done, and the European Central Bank is done, so it’s really only Australia and Japan that are the laggards,” he said.

Goodson said Monday’s 1.3 per cent rally looked to have been driven by a large portfolio investor buying just before the close of trading.

In the latest session, all the big bank stocks were weak.

Among the dual-listed issues, Westpac - which reported its result on Monday - fell 84c (3.5 per cent) to $23.26 while ANZ, which reports next Monday, dropped 42c (1.5 per cent) to $27.72.

“Westpac’s result was quite well-received, but there was some fear around it, particularly their cost of investment in the years ahead,” Goodson said.

“There is a widespread market view that they have underinvested in their core IT infrastructure for some time, and that management needs to play catch-up, but the result itself was pretty much in line with expectations,” Goodson said.

Fisher and Paykel Healthcare (FPH) continued to make steady gains - rising 13c to $22.78 - after being sold down in recent weeks on worries about the impact new GLP1 weight-loss drugs may have on the company, which specialises in respiratory products.

“We put FPH in the slightly affected camp because their sleep apnea sector is only 30 per cent of revenue and is only about 20 per cent of our valuation,” Goodson said.

“And the jury is still out as to what a lesser rate of obesity might mean.”

NZME was initially weaker after downwardly revising its earnings guidance for the year, before ending 2c up at 91c.

The company, publisher of the New Zealand Herald, said in an update that advertising revenue for the first half of 2023 was down 7 per cent year-on-year.

NZME accordingly amended its guidance for ebitda to be between $57m and $59m for 2023, down from its previous guidance of $59m to $64m.

Goodson said it was a modest downgrade for the media company.

“It’s not a bad effort in this environment and, hopefully, it speaks to some decent earnings power, if and when the economy turns,” he said.

Among the other movements, power generator Meridian dropped 9c to $5.03.

Meridian’s associate, NZ Windfarms, kicked off a one-for-8.5 pro-rata renounceable rights issue, offering up to 39 million fully-paid ordinary shares at 15.5c per share.

Last month, the parties agreed to pursue the development and repower of the Te Rere Hau wind farm, as well as a placement of shares to Meridian.

Steel distributor Vulcan Steel dropped 45c (5.7 per cent) to $7.45 but on very light volume.

Takeover target MHM Automation firmed 5c to $1.53 while its far larger peer, Scott Technology gained 10c to $3.90.

Among the smaller issues, 2 Cheap Cars gained 4c or 6 per cent to 70c, while My Food Bag fell 0.6 of a cent to 13.3c.

Jamie Gray is an Auckland-based journalist, covering the financial markets and the primary sector. He joined the Herald in 2011.