NZX 50 gains as oil prices ease; Vista hits two-month high

New Zealand’s S&P/NZX 50 index was swept up in a broad-based rally as oil prices fell after US President Donald Trump’s latest pause in hostilities with Iran to let diplomats try to reopen the Strait of Hormuz.

Vista Group International touched a two-month high after the cinema software firm caught a currency tailwind as first-half revenue climbed 12%, and the company raised its forecast for the rest of the year.

Meanwhile, the kiwi dollar hit a month-low against the yen as Japanese and US officials confirmed their coordinated intervention in foreign exchange markets, with Japan’s finance minister Satsuki Katayama saying her government won’t hesitate to step in again if necessary.

And retailers were broadly stronger after Briscoe Group eked out a small gain in second-quarter sales and improving gross margins, following on from ongoing recovery in households’ appetite to make big-ticket purchases.

Turn around

The NZX 50 snapped two days of declines to rise 75.65 points, or 0.6%, to 13,774.93 in the first day of the month. Within the index, 35 stocks gained, 12 fell and three were unchanged. The S&P/NZX 20 index futures contract for September slipped 0.1% to 7,690, with 159 lots traded for a value of $1.2 million, while the NZX 20 advanced 0.5% to 7,760.62.

Turnover across the main board was $110.1 million with a bank holiday in New South Wales. Auckland International Airport accounted for $21.7 million of that, rising 1.5% to $8.84. The country’s main gateway was the most heavily traded stock on the day with a volume of 2.5 million shares changing hands.

Air New Zealand was among the day’s bigger gainers, up 3.6% at 43 cents as the pause in the Middle East conflict pushed down oil prices. Brent crude oil futures for October fell 5.2% to US$83.37 a barrel.

Still, stock markets across Asia were mixed as South Korea’s chipmakers unwound Friday’s gains, with the Kospi sinking 5.5% in late trading. Australia’s S&P/ASX 200 index nudged up 0.1% in late trading, and Hong Kong’s Hang Seng increased 0.1%.

“US markets were positive on Friday and there was the announcement of a pause in US strikes – oil prices fell and the Iranians came out and said the topic du jour – the Strait of Hormuz – might not be as advanced as Trump said it was,” said Jeremy Sullivan, an investment adviser at Hamilton Hindin Greene. “Markets appear to be welcoming that, even if it’s the opening of diplomatic talks rather than an agreement about to be penned.”

Index heavyweights helped propel the NZX 50 higher, with Port of Tauranga advancing 2.7% to $8.32 and Fisher & Paykel Healthcare gaining 1.1% to $41.15, while Spark New Zealand snapped two days of declines to climb 3.1% to $1.98.

Off to the movies

Vista climbed as high as $2.60, ending the day up 1.6% at $2.51 after reporting a 24% increase in first-half earnings as a weak New Zealand currency provided an extra boost to its global revenue. The software firm also raised its annual revenue guidance to a range of $179 million-to-$184 million, a 1.4% increase at the midpoint.

Tim O'Loan, a research analyst at Amova Asset Management, said Vista’s upgraded guidance was driven by operational outcomes rather than box office performance alone, which indicated underlying momentum in the business.

“The biggest opportunity remains accelerating the customer migration to cloud, but this is done at the near-term expense of cash flow and margins,” O’Loan said in a note. “Management's decision to accelerate investment appears sensible over the longer term given customer demand, and how sticky customers become once they have adopted cloud, but investors will ultimately want to see these investments translate into higher margins and free cash flow generation.”

Retailers were generally stronger after Briscoe posted a 0.3% increase in second-quarter sales, with growth at the Rebel Sport sporting goods chain more-than-offsetting declines at its eponymous homeware stores. Briscoe gained 1.3% to $4.66, while KMD Brands rose 3.9% to $1.88 and Hallenstein Glasson Holdings increased 0.1% to $10.66.

Vulcan Steel posted the biggest gain on the day, up 4% at $6.45 despite Statistics New Zealand figures showing softer residential and non-residential building consents in June. Fletcher Building slipped 0.8% to $3.62, while retirement village operators were broadly weaker as Summerset Group Holdings dipped 1.2% to $8.23 and Ryman Healthcare declined 0.5% to $2.13.

Investore Property was at the bottom of the leaderboard, falling 2.8% to $1.035, while Ebos Group slid 2.3% to $21.54.

Meanwhile, the kiwi dollar fell to a month-low 91.67 yen, trading at 91.99 yen at 5pm in Auckland from 94.27 yen on Friday as the US and Japan confirmed they’d intervened in foreign exchange markets to counter excessive volatility in recent months. The New Zealand dollar traded at 58.81 US cents from 58.68 cents last week.

Reporting by Paul McBeth. Image from Ian Simmonds on Unsplash.