New Zealand shares fell as diminishing expectations for interest rates to go lower sapped the appeal of companies held for their dividends such as Meridian Energy and Chorus. Skellerup led the index lower after reporting a record profit.
The S&P/NZX 50 Index dropped 102.87 points, or 1 per cent, to 10,622.35. Within the index, 33 stocks fell, 12 rose and five were unchanged. Turnover was $169.1 million, of which Sanford accounted for $66.9m.
Investors pared back their expectations for central banks around the world to cut interest rates further. Central bankers are converging in their annual symposium in Jackson Hole, Wyoming, and investors are keenly waiting for Federal Reserve chair Jerome Powell's speech after two regional Fed presidents said no more cuts were needed in the US.
"Yield plays have been sold off a little bit, so that's the power companies and infrastructure stocks that have done so well over the last 12 months giving back some of those gains. Swap rates are up quite a bit," said Grant Davies, an investment advisor at Hamilton Hindin Greene. Swap rates are used as a benchmark to set interest rates on corporate bonds.
Meridian Energy fell 4.1 per cent to $4.77 and Chorus declined 2.7 per cent to $5.14. Both companies are reporting on Monday. Mercury NZ was down 2 per cent at $5.095, Auckland International Airport slipped 2 per cent to $9.40 and Port of Tauranga declined 1.6 per cent to $6.06.
Skellerup led the index lower, down 4.9 per cent at $2.35 on a volume of 416,000 shares, almost three times its 90-day average of 156,000 shares. The rubber goods maker reported a record profit through the strength of its industrial division. Its agricultural unit posted flat earnings in a mixed international dairy market.
"It's not an end of the world result, that's for sure. The share price has done reasonably well over the last month and it's gone back to where it started August," Davies said.
Sanford fell 2.8 per cent to $6.68 on an unusually large volume of 10.3 million shares. Typically, just 51,000 would change hands in a day. The seafood group yesterday announced chair Paul Norling will retire at the annual meeting in December. Refinitiv data show one trade of 8.5 million shares and two 750,000 share trades, all at $6.50.
Of Sanford's substantial shareholders, just Amalgamated Dairies - an investment vehicle of the Goodfellow family - had enough shares to sell a block of that size. As at September 30 last year, it held 22 million shares, or about 23 per cent of the firm.
Vector fell 0.6 per cent to $3.61 after lifting its annual dividend payments as operating earnings rose in line with expectations. It reiterated that it won't provide more guidance until the Commerce Commission settles on a new regulated price path for the next five years.
Air New Zealand rose 2 per cent to $2.85 on a volume of 1.4 million shares. The airline said the Crown will support its purchase of new Boeing widebody aircraft at the upcoming annual meeting, meaning it will secure the simple majority needed. The eight aircraft have a list price of US$2.76 billion ($4.3b) and other relevant costs of US$424m. The airline said the actual price paid will be at a discount provided it's kept confidential.
Spark New Zealand was the second most traded stock on a volume of 4.2 million shares and rose 2.6 per cent to $4.335. Of other companies trading on volumes of more than a million shares, Kiwi Property increased 0.3 per cent to $1.635 and Arvida Group fell 0.7 per cent to $1.38.
Outside the benchmark index, Comvita rose 5 per cent to $2.75 after reporting a $27.7m loss as it wrote down the value of goodwill. The honey products maker delayed reporting the annual result to discuss the write-downs with its auditor.
Steel & Tube Holdings fell 4.2 per cent to 92 cents after returning to profitability, while noting margins were getting squeezed.
TIL Logistics climbed 8.1 per cent to $1.33 after earnings rose to the bottom end of guidance. Winemaker Delegat Group increased 0.1 per cent to $11.73 after reporting a record operating profit but said not to expect another one next year.
Cavalier Corp rose 5.9 per cent to 27 cents after saying it will work with New Zealand Merino to help it adopt a design-led wool focus as it tries to move away from a manufacturing-led mentality.
Geo dropped 11 per cent to 8.5 cents after narrowing its annual loss, and securing a $1.5m funding line via a convertible note from cornerstone shareholder North Ridge Partners.
ASB Bank's 2021 bond paying 4.245 per cent was the most traded debt security on a volume of 1.9 million. The notes closed at a yield of 1.36 per cent, down 14 basis points.