NZX50 ekes out gain as US-Iran strikes weigh on Asia; Space IPO looms

New Zealand’s S&P/NZX 50 index was one of the stronger performers across Asia as Fisher & Paykel Healthcare and Meridian Energy steadied the local bourse as oil prices rose on the latest round of strikes between the US and Iran, while the looming SpaceX initial public offering on Wall Street had some investors making room in their portfolios for the mammoth capital raising.

KMD Brands led the NZX50 higher after a report across the Tasman that private equity firms have started circling the retailer, which is currently reviewing its businesses, while Spark New Zealand advanced on healthy volumes after hiking prices for some customers.

Westpac and ANZ economists lifted their growth forecasts for the first three months of the year, bringing them in line with the Reserve Bank’s projections for how the economy was tracking before the Middle East conflict took hold.

And agricultural companies were mixed as the annual Fieldays rural event kicked off.

Late rally

The NZX50 rose 49.57 points, or 0.4%, to 13,253.65, with 22 stocks gaining, 22 declining and six unchanged. The S&P/NZX 20 index futures contract for June nudged up 0.1% to 7,488 with 10 lots traded for a value of $75,000, while the NZX20 rose 0.4% to 7,512.01.

Turnover across the main board was $169.5 million, of which F&P Healthcare accounted for $27.8 million as it gained 1% to $38.70.

New Zealand’s bourse outperformed most of Asia as tech companies whipsawed again on Wall Street ahead of the SpaceX IPO and as Alphabet’s capital raising had investors rejigging their portfolios to participate. Infrastructure investor Infratil fell 0.8% to $15.05.

Australia’s S&P/ASX 200 index was up 0.1% in late trading, while Japan’s Nikkei 225 dropped 2.3%, Hong Kong’s Hang Seng fell 1.2% and South Korea’s Kospi sank 6.3%.

Brent crude oil futures rose 0.5% to US$91.92 a barrel as the US launched strikes on Iran in retaliation to the shooting down of an Apache helicopter. Polymarket prediction market traders had priced in a 16% chance of a lasting ceasefire by the end of the month and a 32% chance by the end of July.

“US markets were off a little with everyone anticipating the big listing at the end of the week, while geopolitical instability is driving markets a little bit with the rhetoric between the States and Iran with things being one step forward and two steps back in terms of negotiations,” said Jeremy Sullivan, an investment adviser at Hamilton Hindin Greene. “We’re really just in a holding pattern.”

F&P Healthcare and Meridian provided the biggest tailwinds for the NZX50, with the power company gaining 1.4% to $5.88. Power companies were broadly stronger after Genesis Energy said full hydro schemes meant it could shut its gas-powered turbine to make gas available to industrial users in the second half of the year.

Genesis rose 0.8% to $2.55 and Contact Energy increased 0.8% to $9.60, while Mercury NZ slipped 0.7% to $6.75.

Buy the rumour

KMD led the benchmark index higher, jumping 9.3% to 8.2 cents after The Australian’s DataRoom column reported private equity firms had approached the retailer for some or all of its business. The Rip Curl and Kathmandu owner is currently undertaking a strategic review expected to be completed before the annual result in September.

Serko climbed 5% to $1.575 after the travel software developer announced an expansion of chief operating officer Matthew Gerrie’s role and the promotion of David Holyoake to chief product officer.

Tourism Holdings rose 4.8% to $2.61 and USX-listed Skyline Enterprises rose 4.3% to $24.50.

Spark New Zealand rose 1.1% to $1.87 on the day’s biggest volume of almost 5 million shares after the telecommunications carrier told some customers their broadband and mobile prices would rise.

Skellerup Holdings advanced 2.3% to $6.12 after Forsyth Barr analysts raised their target price on the rubber goods maker by 55 cents to $7.15 and kept their ‘outperform’ rating, saying strong milk prices supported its agri products, while key industrial customers had released positive trading updates.

Rural companies were broadly weaker as the local Fieldays event opened at Mystery Creek in Waikato. PGG Wrightson rose 1.5% to $2.08, Allied Farmers gained 1.5% to 66.5 cents and Comvita increased 1.5% to 70 cents, while Scales Corp slipped 1.8% to $5.97, T&G Global dipped 0.8% to $2.42, Fonterra Shareholders’ Fund units decreased 0.2% to $7.205 and Seeka fell 1.4% to $4.85. Synlait Milk was unchanged at 43 cents.

Vulcan Steel posted the biggest decline on the NZX50, falling 6.4% to $5.90 as it gave up recent gains, while Air New Zealand decreased 3.4% to 42.5 cents and Gentrack dropped 3% to $3.85. Sanford shed 2.8% to $7, falling below the recent sale price by Ngāi Tahu in its block trade.

Among companies that went ex-dividend, Tower fell 2.6%, or 5 cents, to $1.90 ahead of its 5 cents per share return and Goodman New Zealand slipped 0.5%, or 1 cent, to $2.05 with an upcoming payment of 1.71 cents per share. Kiwi Property Group was unchanged at 92 cents ahead of its 1.4 cent dividend and Napier Port Holdings was unchanged at $3.65 with an upcoming 5.25 cents per share payment.

Outside the benchmark index, Scott Technology extended its rally on new contracts, jumping 10% to $2.85.

The kiwi dollar traded at 58.14 US cents at 5pm in Auckland from 58.29 cents yesterday as the yield on New Zealand’s 10-year government bond slipped 2 basis points to 4.54%, a touch below its US equivalent.

Westpac and ANZ economists both raised their forecasts for quarter gross domestic product, predicting the economy grew 1% in the first three months of the year, ahead of the fuel price surge from the conflict in the Middle East.

Reporting by Paul McBeth. Image from Curious News.