NZX 50 joins Asia rally on Wall Street record while Contact outlook cools

New Zealand’s S&P/NZX 50 index joined gains across Asia, with stock markets buoyed by Wall Street’s latest record, even as elevated tensions in the Middle East pushed oil prices higher and Contact Energy delivered a strong annual result with modest outlook.

Infratil was among the heavyweights driving the NZX 50 higher, with its CDC Data Centres unit exploring a potential development with Contact in Taranaki.

Across the Tasman, Magellan Financial Group gained amid reports that its Barrenjoey Capital Partners investment banking unit was in talks with Craigs Investment Partners as it prepares to enter New Zealand, shaking off a wider chill on financial stocks across the Tasman after Westpac Banking Corp reported a slump in Australian mortgage applications.

And Bremworth jumped as shareholder David Ferrier prepares to mount a partial takeover offer, while 2 Cheap Cars continued to trade above what co-founder David Sena is offering to take it private as minority shareholders near a blocking 10% stake.

Global tailwinds

The NZX 50 gained 64.11 points, or 0.5%, to 13,888.24, with 24 stocks gaining, 21 falling and five unchanged. The S&P/NZX 20 index climbed 0.7% to 7,830.1, while the NZX 20 futures contract didn’t trade.

Turnover across the main board was $122.9 million, of which Contact accounted for almost $14 million as it slipped 1.2% to $8.97.

The country’s second-biggest electricity generator reported a 31% lift in annual earnings to $1.01 billion, as full hydro lakes swelled generation in the past year. The power company forecast a 3.4% lift in earnings for the 2027 year, with futures pricing softening in recent months.

“All things considered, it was a relatively solid result, as the market was expecting,” said Jeremy Sullivan, an investment adviser at Hamilton Hindin Greene. “You’d expect the gentailers did pretty well on generation rather than the retailing side, but strong results heading into a general election do increase the chance of political feedback a little bit.”

Lines company Vector posted the biggest gain on the day, up 2.7% at $4.98, while Meridian Energy increased 0.4% to $5.63, Genesis Energy advanced 0.4% to $2.62 and Mercury NZ fell 2.8% to $6.68.

Contact’s annual result signals a step up in the domestic earnings season, with PGG Wrightson due to report on Tuesday – it gained 3.5% to $2.38 – before things really step up a gear next week.

Infratil provided one of the stronger tailwinds for the local market, climbing 2.2% to $15.28 after saying its CDC unit would partner with Contact in seeking consent for a 250 megawatt data centre in Taranaki.

Blue chip stocks were generally stronger, joining a broad rally across Asia as Wall Street’s S&P 500 hit a new record on Friday after softer jobs data than predicted cooled expectations for the Federal Reserve to raise its benchmark rate next month.

Fisher & Paykel Healthcare rose 1.2% to $42.20 and Auckland International Airport advanced 1.6% to $8.90.

Japan’s Nikkei 225 index climbed 1.8% in late trading, while Hong Kong’s Hang Seng dropped 0.7%. The kiwi dollar rose to 58.86 US cents at 5pm in Auckland from 58.64 cents on Friday.

Banking blues

Australia’s S&P/ASX 200 index was a laggard, as Westpac’s weak quarterly update dragged down the broader financial sector, with Commonwealth Bank of Australia falling 2.1%.

Magellan climbed 1.7% to A$10.42 as the Australian Financial Review’s Street Talk column reported its Barrenjoey investment banking arm was in talks to buy local investment house Craigs’ investment banking and capital markets business.

On this side of the Tasman, dual-listed Westpac dropped 5.2% to $43.20 and ANZ Group Holdings slipped 1.9% to $44.30.

Gentrack posted the steepest decline on the day, falling 5.7% to $3.65, while Serko advanced 1.2% to $1.71 and Vista Group International increased 0.8% to $2.64 after signing Hoyts to its cloud product.

Goodman New Zealand was the most heavily traded stock on the day with a volume of 3.2 million shares changing hands as it slipped 0.5% to $2.

Outside the benchmark index, Bremworth jumped 14% to 74 cents after interests associated with David Ferrier owning almost 20% of the carpetmaker’s stock entered into lock-up agreements, under which shareholders owning about 32% of the company agreed to accept a partial takeover offer of at least 90 cents per share.

Meanwhile, 2 Cheap Cars was unchanged at 80.5 cents on light volumes after David Sena extended his takeover bid to Sept 23. Opposition to the offer has been rallying on the ShareTrader investment forum, with shareholders owning 8.4% indicating they won’t accept the offer.

CDL Investments was unchanged at 65 cents after reporting a 5% dip in first-half profit as the nation’s subdued residential property sector weighed on activity.

My Food Bag rose 1.7% to 30 cents after chair Tony Carter signalled plans to retire at the November annual meeting, with independent director Mark Powell to succeed him.

And Rua Bioscience was unchanged at 3.4 cents after the medicinal cannabis firm’s board approved a convertible note facility of up to $600,000 to buy enough stock to accelerate sales.

Reporting by Paul McBeth. Image from Curious News.