Infratil leads NZX50 lower as speeding US growth renews rate debate

Infratil led New Zealand’s S&P/NZX 50 index lower as stock markets across Asia broadly followed a soft lead from Wall Street, where a faster pace of economic growth in the June quarter had analysts second-guessing whether the Federal Reserve will cut interest rates as aggressively as previously thought, weighing more heavily on tech stocks such as Gentrack and Serko.

It was a mixed day for retailers as ANZ’s latest consumer confidence survey showed households still feel uncomfortable about making big-ticket purchases, with Briscoe Group declining while KMD Brands gained for a third day and Hallenstein Glasson Holdings advanced after lifting annual profit and highlight stronger trading on the other side of the Tasman.

The Fonterra Shareholders’ Fund gained as it remains near an adjusted record high, with Forsyth Barr raising its target price for the vehicle exposed to Fonterra’s earnings, after delivering a solid result on Thursday and forecasting a robust outlook for the year ahead.

Meanwhile, Ryman Healthcare rallied ahead of its secondary listing across the Tasman, with the retirement village operator poised to join the ASX on Wednesday.

Tight times

The NZX50 fell 42.06 points, or 0.3%, to 13,111.73 on Friday, to end the week down 0.9% and snapping three weekly gains, albeit two of those were marginal. Within the index, 20 stocks declined on Friday, 26 gained, and four were unchanged. Turnover was $134.2 million across the main board, of which Fisher & Paykel Healthcare accounted for $24.2 million as it rose 0.6% to $36.50.

Stock markets across Asia followed Wall Street lower as upward revisions to US economic growth in the June quarter prompted some analysts to pare back their expectations on how quickly and steeply the Federal Reserve will cut its benchmark interest rate. Japan’s Nikkei 225 index was down 0.6% in late trading, while Hong Kong’s Hang Seng declined 0.5%.

That also bolstered demand for the greenback, with the kiwi dollar sliding below 58 US cents for the first time since April, trading at 57.69 US cents at 5pm in Auckland from 58.24 cents yesterday.

Australia’s S&P/ASX 200 index nudged lower in late trading as CSL declined 1.5% and Tenix Pharmaceuticals fell 2.5% after US President Donald Trump announced new tariffs on drugs from companies not making pharmaceuticals in the US.

Index heavyweight Infratil led New Zealand’s benchmark lower, falling 3.6% to $12.20 and was joined by tech companies Serko and Gentrack, down 2.6% at $2.59 and 2.3% at $9.97 respectively. Eroad, which is outside the benchmark, dropped 3.9% to $2.50.

Tight budgets

Retailers were mixed after ANZ’s latest consumer confidence survey showed households were slightly less gloomy in September than the previous month, but still think it’s not a good time to make a large purchase.

“It’s not all doom and gloom out there. The proportion of households saying that they feel worse off than a year ago has been steadily declining, even as unemployment has been creeping higher,” ANZ New Zealand chief economist Sharon Zollner said in a note. “Our view continues to be that the release of Q2 GDP marked peak pessimism.”

Briscoe Group fell 1.4% to $5.09, while KMD Brands rose for a third day, up 3.9% at 27 cents, with the outdoor equipment chain said to be attracting some interest from Australian billionaire Brett Blundy.

Meanwhile, Hallenstein Glasson Holdings rose 0.6% to $8.95 after the clothing chain lifted annual profit 14%, with sales particularly strong at its Glasson women’s wear chain in Australia. The retailer said Australian sales were driving a strong start to the current financial year.

Ryman Healthcare posted the biggest gain on the day, up 4.2% at $2.50 with the retirement village operator extending its run on the green side of the ledger for a second day ahead of its debut on the ASX next Wednesday when it takes a secondary listing across the Tasman. Summerset Group Holdings increased 0.7% to $10.68.

Fonterra Shareholders’ Fund units rose 1.3% to $7.91 after Forsyth Barr analysts raised their target price on the stock to $8.65 from $8 after the dairy exporter yesterday reported a strong result for a second year running.

Matt Montgomerie, an analyst at Forsyth Barr, said Fonterra’s balance sheet is in a much stronger state after weak cashflow in the first half, and that opens the chance for further capital management opportunities.

Auckland International Airport was the most heavily traded stock with a volume of 1.9 million as it fell 2.2% to $7.63.

Outside the benchmark, Synlait Milk rose 2.2% to 70 cents after refinancing its banking facilities.

Trading of telco minnow Vital was suspended pending its delisting next week after Tait International’s successful takeover at 45 cents a share.

Reporting by Paul McBeth. Image from Tom Official on Unsplash.