NZX 50 falls for 4th day as investor sentiment cools across Asia

New Zealand’s S&P/NZX 50 index joined the broadly weaker day across Asia as reports that Dutch chip machine supplier ASML plans to raise prices weighed on chip stocks across the region, with data centre investors such as Infratil and Australia’s NextDC among those on the red side of the ledger.

Meridian Energy was among the heavyweight companies weighing on the local benchmark after the country’s biggest electricity generator said forward wholesale prices had come down on the development pipeline of new generation.

Meanwhile, logistics group Mainfreight gained after reiterating its growing momentum in the first two months of the financial year, while Brent crude oil prices dipped despite reports that US President Donald Trump was leaning towards expanding military operations in Iran.

And Sanford advanced after Forsyth Barr analysts upgraded their rating on the stock after a sharp selloff since May on the significantly improved business.

Nervous times

The NZX 50 fell for a fourth session, slipping 19.56 points, or 0.1%, to 13,615.16, with 25 stocks declining, 21 gaining and four unchanged. The S&P/NZX 20 index futures contract for September was unchanged at 7,660, with no lots traded, while the NZX 20 slipped 0.2% to 7,694.84.

Turnover across the main board was a modest $98.7 million, with Fisher & Paykel Healthcare accounting for $13.3 million as it increased 0.3% to $39.65.

Stocks across Asia were broadly weaker with tech stocks falling out of favour after The Information reported ASML planned to raise prices. The Dutch chip machine supplier had raised its sales outlook overnight, and said it planned to increase production to meet the growing demand.

Japan’s Nikkei 225 index dropped 2.9% in late trading, while South Korea’s Kospi sank 6.4%. Australia’s S&P/ASX 200 index was down 0.2%.

The cooler sentiment on tech stocks and the artificial intelligence trade weighed on the likes of data centre investors, with ASX-listed NextDC down 1.8% in late trading, while Infratil fell 0.8% to $15.26 on the NZX.

Domestic heavyweights weighed on the local benchmark more broadly, with Auckland International Airport down 1.4% at $8.43 on the day’s biggest volume of 1.3 million shares, and Meridian falling 1.1% to $5.54.

The country’s biggest electricity generator noted the decline in forward wholesale prices while reporting increased national hydro storage, despite a warm month of June and varied rainfall across both islands. Mercury NZ decreased 0.6% to $6.8 and Genesis Energy slipped 0.4% to $2.58, while Contact Energy increased 1.2% to $9.22. Lines company Vector was down 0.4% at $4.97.

Travel software company Serko posted the steepest decline on the NZX 50, falling 2.9% to $1.35, while Summerset Group Holdings fell 2.6% to $8.33 and Sky Network Television slipped 1.8% to $3.27.

Something fishy

Sanford climbed 3.7% to $7 after Forsyth Barr analysts Paul Laxton Koraua and Matt Montgomerie raised their rating on the stock to ‘outperform’ from ‘neutral’ and affirmed their target price at $9.50, saying the 17% slide in the share price since May made its historically discounted price-to-earnings ratio look attractive.

“Given the turnaround in returns and earnings, and the subsequent rise in the share price, some may think the investment thesis is nearing completion,” the Forsyth Barr analysts said in a note to clients. “However, we believe operational improvements remain available, the balance sheet continues to strengthen, and Sanford now has greater flexibility to invest selectively or return more capital to shareholders.”

SkyCity Entertainment Group posted the biggest gain on the day, up 3.9% at 53.5 cents, while KMD Brands rose 2.1% to $1.70.

Mainfreight advanced 3.8% to $63.63 after the logistics firm reaffirmed its growing momentum in its six-monthly newsletter to staff, saying sales growth and sales volumes, particularly in transport, had improved across all regions in the first two months of the financial year.

Meanwhile, Brent crude oil futures slipped 0.5% to US$84.50 a barrel at 5pm in Auckland, despite the ongoing conflict between the US and Iran in the Persian Gulf and amid reports US President Trump was mulling an expansion of the military operations.

Outside the benchmark index, miners followed Australia’s BHP lower, with Tāiko Critical Minerals falling 6.7% to 28 cents as it prepared to kick off a share purchase plan, while Santana Minerals dropped 4.5% to 53 cents.

Livestock Improvement Corp was unchanged at $1.21 after the genetics cooperative reported a 30% slump in annual net profit to $21.4 million on a 6.7% gain in revenue to $314.8 million, as the firm ramped up spending on its technology and security platforms.

The kiwi dollar held on to most of its overnight gains, trading at 58.48 US cents at 5pm from 58.16 cents yesterday.

Reporting by Paul McBeth. Image from Curious News.