NZX50 nudges higher as US-Iran ceasefire optimism wanes

New Zealand’s S&P/NZX 50 index kept its head above water in a softer day across Asia as the fragility of the US-Iran ceasefire remains on display ahead of peace talks this weekend, with higher oil prices weighing on the likes of Air New Zealand and Tourism Holdings.

Heavyweights Infratil and Fisher & Paykel Healthcare buoyed the benchmark index, while tech companies Serko and Eroad followed a positive lead from Wall Street overnight, with Gentrack an outlier as the utilities software developer dipped.

Vista Group International gained after Forsyth Barr analysts raised their target price on the cinema analytics firm with a strong box office this year expected to help the sluggish recovery in movie ticket sales.

And economic bellwether Freightways declined after the ANZ’s latest Truckometer gauge showed a decline in light traffic movements in March, while heavy traffic edged up in the month.

Fragile hopes

The NZX50 rose 19.87 points, or 0.2%, to 13,273.81, with 19 stocks gaining, 24 declining, six unchanged and the Fonterra Shareholders' Fund still in a trading halt for its capital return. Turnover across the main board was $132.8 million, of which F&P Healthcare accounted for $15.8 million as it rose 1% to $39.33.

Stocks across Asia gave up some of yesterday’s rally as investors dialled back their optimism over the Middle East ceasefire after Iran accused the US of breaching the deal, and as Israel escalated attacks on Hezbollah targets in Lebanon.

The S&P/ASX 200 index was marginally lower in late trading, while Japan’s Nikkei 225 fell 0.8% and Hong Kong’s Hang Seng dipped 0.2%.

“We’ve been giving back those earlier gains as the day progressed, with Infratil doing the heavy lifting after we saw a decent rally in tech stocks in the US,” said Jeremy Sullivan, an investment adviser at Hamilton Hindin Greene. “Global share markets were pretty positive on the back of a very fragile ceasefire.”

Infratil touched a five-month high as it ended the day up 1.7% at $12, adding to yesterday’s gain after saying the valuation of its CDC data centre investment rose in the March quarter.

Tech stocks were broadly stronger, following a rally on the tech-heavy Nasdaq Composite overnight, with Serko gaining 3.9% to $1.85.

Vista climbed 3.5% to $1.78, buoyed by Forsyth Barr lifting its target price on the stock by 22 cents to $3.18 and keeping its ‘outperform’ rating, saying a series of major franchise movies due this year should support box office takings through 2026.

Gentrack bucked the trend, falling 3% to $6.50, while outside the benchmark index Eroad rose for a sixth day, up 1.6% at 97 cents.

Exporters shrugged off the recovery in the kiwi dollar – which clawed back overnight losses to trade at 58.34 US cents at 5pm in Auckland, unchanged from yesterday – with Sanford posting the biggest gain on the day, up 4% at $7.50, while a2 Milk Co rose 1.3% to $11.35.

Rising rates

The yield on New Zealand’s 10-year government bond rose 7 basis points to 4.7% at 5pm, with growing expectations for the Reserve Bank to start raising the official cash rate from its 2.25% level in the second half of the year.

Hamilton Hindin Greene’s Sullivan noted that in past experience, second-round price increases – which the Reserve Bank is more wary of – tend to move more quickly than the first tranche of price hikes.

The Treasury’s NZ Debt Management unit sold $275 million of 2031 bonds and $175 million of 2034 bonds at its weekly tender, with both offers overbid by almost three times.

Vulcan Steel posted the steepest decline on the NZX50, falling 4.1% to $6.85, while Tower fell 3.3% to $1.915 as Cyclone Vaianu bears down on the North Island.

Air New Zealand gave up some of yesterday’s gains as Brent crude oil futures nudged higher amid the nervousness of the fragile ceasefire in the Middle East, with the national carrier falling 3.2% to 46 cents. Import terminal operator Channel Infrastructure fell 3.3% to $2.95.

Courier operator Freightways slipped 2.6% to $12.90 after the ANZ’s Truckometer gauge showed light traffic flows fell 2.4% in March, its second monthly decline in the past nine months, while the heavy traffic index rose 0.4%.

Global logistics group Mainfreight slipped 0.9% to $60.

Spark was the most heavily traded stock on the NZX50 with a volume of 2.4 million shares changing hands, with the telco ending the day unchanged at $2.18.

Outside the benchmark index, NZMZE was the most heavily traded stock on the main board with 6.8 million shares changing hands – its biggest one-day volume since August – as the media group increased 0.9% to $1.10. The bulk of the volume was in a 6.7 million block, which traded at $1.05 a share.

Separately, the media group told staff an independent workplace review found two issues that still needed to be addressed in the coming weeks, with safety and welfare concerns dealt with the departure of three senior managers that prompted the probe.

Reporting by Paul McBeth.