NZX 50 falls as gentailers slide; KMD drops on soft outlook

New Zealand’s S&P/NZX 50 index fell with the electricity generator-retailers dragging the benchmark lower, with the likes of Meridian Energy and Mercury NZ following Australian utilities down as cheaper oil prices sapped demand for the energy sector.

KMD Brands dropped after the retailer’s outlook unnerved investors, even as the surfwear and outdoor equipment firm said it was in talks with potential suitors.

Asian markets were mixed ahead of US President Donald Trump’s summit with his Chinese counterpart Xi Jinping, while renewed appetite for the artificial intelligence trade continued to buoy South Korea’s Kospi and local data centre investor Infratil.

Meanwhile, the Fonterra Shareholders’ Fund snapped a seven-day rally ahead of the dairy cooperative’s annual result, which is expected to show earnings at the upper end of guidance.

Powering down

The NZX 50 fell 53.72 points, or 0.4%, to 13,821.76, with 28 stocks declining, 19 gaining and three unchanged. The S&P/NZX 20 index futures contract for December declined 0.6% to 7,650, with 920 lots traded for a value of $7.1 million, while the NZX 20 slipped 0.5% to 7,620.49.

Turnover across the main board was $131.8 million, of which Fisher & Paykel Healthcare accounted for $21.5 million, as it edged up 1 cent to $44.99.

Stock markets across Asia were mixed as Chinese markets declined ahead of President Xi’s meeting with his US counterpart, when the leaders were expected to discuss trade, artificial intelligence and other geopolitical issues. Hong Kong’s Hang Seng was down 0.8% in late trading.

Meanwhile, tech companies were buoyed on Wall Street on cheaper oil prices – Brent crude futures fell 1.1% to US$98.15 a barrel at 5pm in Auckland – with South Korea’s Kospi carrying on the positive lead as it rose 0.4%. Australia’s S&P/ASX 200 index increased 0.3%.  

The soft oil price weighed on Australian energy companies including Woodside Energy and Santos, while utilities including APA Group and Origin Energy were also weaker.

New Zealand’s power companies joined their Australian peers lower, with Meridian sliding 1.6% to $5.53, Mercury declining 1.6% to $6.87 and Contact Energy decreasing 1.1% to $8.69. Genesis Energy fell 3.1%, or 8 cents, to $2.50 as it went ex-dividend on an upcoming payment of 7.575 cents per share.

Gentrack posted the sharpest decline on the NZX 50, falling 5% to $4.02 in relatively light trading.

Missed expectations

KMD dropped 5% to $1.92, unwinding much of yesterday’s rally, after the retailer’s outlook fell short of analyst expectations. Revenue rose and underlying earnings recovered, although a $462.7 million impairment charge left the bottom line in red ink.

“Sales were up by 5%, but guidance was lacking – markets were hoping for a slightly higher range for FY27,” said Jeremy Sullivan, an investment adviser at Craigs Investment Partners. “There are signs of improvement, but execution is going to be key for them.”

KMD’s board also said it was engaging with a number of potential suitors for the business. Briscoe Group, which is a small shareholder of KMD, gained 2.3% to $4.83, the biggest gain on the benchmark.

Infratil rose for a third day amid the renewed optimism for all things AI, rising 1.1% to $14.50. Goodman New Zealand increased 0.3% to $1.965.

Spark New Zealand was the most heavily traded stock on the day with a volume of 1.7 million shares changing hands, as the telecommunications carrier fell 0.8% to $1.995.

Fonterra Shareholders’ Fund units fell 1.4% to $8.165 ahead of the dairy cooperative’s annual result on Thursday. Fonterra’s farmer-owned cooperative shares gained 2.1% to $4.80.

Outside the benchmark index, Livestock Improvement Corp was unchanged at $1.13 after the farmer-owned dairy genetics cooperative refrained from giving guidance at its annual meeting due to the uncertainties around fuel costs and the El Niño weather pattern.

Minnow AFC Group – which hasn’t traded this year – said the Financial Markets Authority sent it a letter questioning the firm’s going concern assessment in its 2026 financial statements. The company’s board and auditor are considering the regulator’s feedback.

And the kiwi dollar fell to 57.02 US cents at 5pm from 57.36 cents yesterday, with the yield on New Zealand’s 10-year government bond falling 3 basis points to 4.92%, below the 4.97% level of its US equivalent.

Craigs’ Sullivan said bond traders were pricing in a 78% chance of two hikes by the Reserve Bank before Christmas, and 120 basis points of increases by the end of next year.

Reporting by Paul McBeth. Image from Curious News.