NZX 50 ekes out small gain as softer dollar buoys exporters

New Zealand’s S&P/NZX 50 index staged a late rally to end the day higher, as exporters and trade-exposed firms including Port of Tauranga and Skellerup Holdings buoyed the benchmark as the kiwi dollar tumbled against the greenback on renewed inflation fears driving up global bond yields.

Fonterra Shareholders’ Fund units rallied after the dairy cooperative posted a strong annual profit, with earnings already back to where they were before the sale of the Mainland consumer business, and paved the way for a fatter dividend.

Interest-rate sensitive sectors such as commercial landlords and software companies were weaker as New Zealand’s 10-year government bond neared a three-year high, while Air New Zealand and Mainfreight dipped on the bubbling oil price and Briscoe Group was at the bottom of the leaderboard after going ex-dividend.

Across the Tasman, unemployment unexpectedly rose, although jobs growth kept alive expectations for a rate hike by the Reserve Bank of Australia next week.

Bonded markets

The NZX 50 increased 3.07 points to 13,824.83, with 22 stocks gaining, 26 declining and two unchanged. The S&P/NZX 20 index futures contract for December rose 0.4% to 7,684, with 50 lots traded for a value of $382,000, while the NZX 20 nudged up 0.1% to 7,624.33.

Turnover across the main board was $112.7 million, of which Auckland International Airport accounted for $16.8 million as it advanced 0.6% to $8.40.

Stock markets across Asia were broadly weaker, following Wall Street’s soft lead as elevated oil prices revived inflation fears, and pushed up bond yields around the world. The yield on New Zealand’s 10-year government bond jumped 15 basis points to 5.07% at 5pm in Auckland, having hit its highest level since November 2023, though still below its US equivalent at 5.12%.

Japan’s Nikkei 225 index gained 1.3% in late trading as it returned from a three-day holiday, while Hong Kong’s Hang Seng fell 0.4% and Singapore’s Straits Times Index slipped 0.1%.

Australia’s S&P/ASX 200 index was down 0.7% after data across the Tasman showed the unemployment rate unexpectedly rose to 4.6%, although jobs growth reaffirmed expectations for a rate hike by the Reserve Bank of Australia, and the kiwi dollar rose to 80.65 Australian cents at 5pm from 80.28 cents yesterday.

“Ordinarily, that might argue for a little more patience from the RBA. But with inflation still the bank’s primary concern and recent rhetoric remaining hawkish, a 25-basis point rate hike next week still looks more likely than not,” Salt Funds Management economist Bevan Graham said in a note. “The key question now is how many hikes the RBA will deliver before it is satisfied the slowdown in activity and labour demand is sufficiently entrenched to deliver the inflation outcome it is seeking.”

New Zealand’s stock market was one of the few in positive territory in the Asian trading session, with trade-exposed companies underpinning its late rally. The kiwi fell to 56.75 US cents from 57.02 cents yesterday.

Napier Port Holdings led the index higher, up 3.3% at $3.80, while Port of Tauranga advanced 2.7% to $8.31, Skellerup gained 2.7% to $7.70 and Sanford increased 2.5% to $6.56.

Milking it

Fonterra Shareholders’ Fund units gained 1.4% to $8.28 after the dairy exporter reported a 39% increase in underlying annual earnings, coming in just above its guidance, and matching its level before the sale of the Mainland consumer business two years ahead of schedule.

Greg Smith, investment specialist at Generate Investment Management, said the softer kiwi dollar was a major tailwind for exporters and manufacturers, with Fonterra Cooperative Group’s strong result a case in point.

“It was an impressive result given the geopolitical uncertainties and higher costs,” Smith said.

Fisher & Paykel Healthcare increased 0.2% to $45.10.

Still, the prospect of higher interest rates weighed on rate-sensitive companies such as software firms and commercial landlords, with Gentrack sliding 3.7% to $3.87, Vista Group International declining 3.2% to $2.75 and Goodman New Zealand decreasing 2.3% to $1.92.

Briscoe Group posted the biggest decline on the NZX 50, falling 6.2%, or 30 cents, to $4.53 after shedding rights to an upcoming dividend of 10 cents.

The elevated oil price – Brent crude futures slipped 0.8% to US$102.23 a barrel – weighed on transport companies, with Mainfreight declining 0.7% to $66.05 and Air New Zealand slipping 1.2% to 40 cents after reiterating the challenging environment at its annual meeting.

Vector decreased 1.7% to $4.57 after outlining a refreshed strategy at today’s annual meeting to prepare for increased electrification of Auckland.

Fletcher Building was the most heavily traded stock on the main board, with a volume of almost 2.9 million shares changing hands as the materials firm slipped 0.3% to $3.58. The bulk of that was in an off-market trade of 2.4 million shares at $3.55 a share.

Outside the benchmark index, Bremworth rose 1.5% to 70 cents after appointing two new directors, including suitor David Ferrier, while Comvita climbed 4.7% to 78.5 cents after shareholder PHC Investments put forward a resolution at the upcoming meeting to remove Bob Major and Greg Barclay from the board.

Reporting by Paul McBeth. Image from Fonterra.