NZX 50 gains as US-Iran tensions subside, exporters rally

New Zealand’s S&P/NZX 50 index rallied on Monday, with exporters such as a2 Milk Co and Fisher & Paykel Healthcare underpinning gains as they benefitted from a weak currency amid divided expectations the Reserve Bank will hike interest rates next week.

Stock markets across Asia were broadly stronger as the latest easing of tensions between the US and Iran capped gains for oil prices, while South Korea’s Kospi and Japan’s Nikkei were knocked by the Bank for International Settlements joining growing unease about the pace of investment in artificial intelligence.

Vulcan Steel led the NZX 50 higher after Forsyth Barr analysts raised their rating on the metals company to ‘outperform’, calling the recent slump in price an attractive entry.

And Forsyth Barr officially launched its dedicated capital markets business, headed by Carl Blanchard, to be run independently of the wealth management and focus on strong relationships with corporate and institutional investors.  

Not so heavy

The NZX 50 rose 50.33 points, or 0.4%, to 13,545.56, with 13 stocks gaining, 36 declining and one unchanged. The S&P/NZX 20 index futures contract for September was untraded, while the NZX 20 climbed 0.5% to 7,663.26.

Turnover across the main board was $151.7 million, of which Meridian Energy accounted for $19.6 million as the country’s biggest electricity generator dipped 0.2% to $5.74. The power company was the most heavily traded stock on the day with a volume of 3.4 million shares changing hands.

F&P Healthcare rose 2% to $39.21 on a turnover of $19.4 million, while a2 Milk climbed 3% to $9.05, with the exporters buoyed by the ongoing weakness in the kiwi dollar, which traded at 56.44 US cents at 5pm in Auckland from 56.41 cents last week.

Stock markets across Asia were broadly stronger after the US and Iran reportedly agreed to halt their latest bout of missile and drone strikes and press ahead with peace talks this week, cooling fears that heightened tensions would drive up oil prices. Brent crude futures increased 0.9% to US$73.23 a barrel at 5pm.

“We woke up today after some conflict over the weekend with some nervousness that oil prices would go up and the ceasefire dead in the water, but oil prices stayed relatively calm,” said Mark Lister, investment director at Craigs Investment Partners. “The market’s watching offshore leads and keeping an eye on oil and pondering what it might mean for our inflation and the Reserve Bank’s next month.”

Australia’s S&P/ASX 200 index was up 0.3% in late trading and Hong Kong’s Hang Seng jumped 1.8%, while Japan’s Nikkei 225 dropped 1.1% and South Korea’s Kospi sank 2.4% amid the latest warnings over the threat posed by AI investment not delivering an adequate return.

Infratil, which is often tied to the AI trade through its investment in CDC data centres, gained 0.8% to $15.32.

Steel yourself

Vulcan Steel led New Zealand’s NZX 50 higher, climbing 3.4% to $6.31 after Forsyth Barr analysts raised their rating on the stock to ‘outperform’ from ‘neutral’, while trimming their target price by $1.20 to $7.80.

“We believe the recent derating provides an attractive entry point, with Vulcan Steel trading around its all-time lows,” analysts Rohan Koreman-Smith, Paul Laxton Koraua and Sam Averill said in a note to clients. “We acknowledge the ongoing uncertainty around the shape of the cyclical recovery but expect the upcoming FY26 result to highlight continued sequential volume and margin improvement despite the recent macro volatility.”

Channel Infrastructure posted the biggest decline on the day, falling 2.7% to $3.20, while Serko dropped 2.7% to $1.45 and Vista Group International slid 2.4% to $2.03.

Outside the benchmark index, PGG Wrightson fell 1.4% to $2.17 after appointing Elders managing director Mark Allison to its board from July. Allison will be a non-independent director due to Elders’ stake in the NZX-listed rural services firm, which might be reviewed once he steps down from his executive role at the end of September.

Statistics New Zealand figures today showed filled jobs rose 0.3% in May, with ASB Bank economist Wesley Tanuvasa saying he still expected a slowing in growth due to the Middle East shock.

And Forsyth Barr formally split into separate wealth management and capital markets businesses, operating under the umbrella of holding company Forsyth Barr Group. The investment house this month agreed to sell its Octagon Asset Management and Summer KiwiSaver scheme with almost $1 billion under management to SPH Wealth Holdings, the parent of Salt Funds Management, Pathfinder and Helm Wealth Advisory.

Reporting by Paul McBeth. Image from Curious News.