NZX50 sinks as war breaks out in Middle East; oil soars

New Zealand’s S&P/NZX 50 index dropped at the start of a global rout after US President Donald Trump’s strikes on Iran aimed at toppling the regime triggered a wave of attacks across the Middle East, prompting investors to flee riskier assets in the latest bout of geopolitical instability.

Transport and tourism companies were among the hardest hit on the local bourse, with Tourism Holdings, Napier Port Holdings and Serko among those at the bottom of the leaderboard as Brent crude oil prices surged, although would-be miners such as Santana Minerals and Rua Gold didn’t benefit from the advancing gold price in the same way as Australian-listed Newmont.

Michael Hill International was one of the few companies to gain on New Zealand’s bourse after the jewellery chain reported a 29% jump in like-for-like first-half earnings, while Bremworth rallied as interests associated with scourer WoolWorks’ owner David Ferrier built up a 10% stake in the listed carpetmaker.

Meanwhile, members of a2 Milk Co’s executive team sold up to half of their shares issued before 2024, largely to cover tax obligations.

Epic Fury

The NZX50 dropped 66.32 points, or 0.5%, to 13,656.65, with 36 stocks declining, 12 gaining, and two unchanged. Turnover across the main board was $122.8 million, of which Fisher & Paykel Healthcare accounted for $21.5 million as the medical device maker rose 0.8% to $41.23.

The local bourse joined a rout across Asia as markets responded to the White House’s Epic Fury operation over the weekend as airstrikes killed dozens of Iranian officials including supreme leader Ayatollah Ali Khamenei, followed by ensuing attacks and counterattacks as the Middle East descends into war.

Brent crude oil futures jumped 5.8% to US$77.06 a barrel at 5pm in Auckland as some vessels avoid the Strait of Hormuz – a major shipping channel for oil tankers – while the Organization for Petroleum Exporting Countries committed to lifting output from April to mitigate supply risks.

“It will be interesting to see how the US market opens up – New Zealand and Australia are having an off day, although Australia is faring a bit better than us with their resources exposure,” said Jeremy Sullivan, an investment adviser at Hamilton Hindin Greene. “Oil prices tracked up quite strongly, miner Newmont was up just shy of 6% and DroneShield was up – the things that are correlated positively are up and the negative ones are down.”

Australia’s S&P/ASX 200 index fell 0.3% in late trading, with gains for energy producers such as Woodside Energy and Santos and miners including Newmont cushioning the benchmark from the broader selloff. Japan’s Nikkei 225 dropped 1.4% and Hong Kong’s Hang Seng declined 1.6%, while S&P 500 futures were pointing to a 0.8% decline when Wall Street opens overnight.

Tourism Holdings led the NZX50 lower, sinking 9.6% to $2.46 as travel, logistics and tourism companies were among those at the bottom of the leaderboard.

Napier Port fell 4.2% to $3.63 and Serko fell 3.5% to $1.95, with the travel software developer also knocked by the sour sentiment towards tech companies of late.

Under pressure

Mainfreight declined 2.1% to $63, Freightways slipped 1.1% to $14.20, and Auckland International Airport decreased 0.1% to $9.15, while Air New Zealand fell 0.9% to 55 cents on a volume of 4.6 million shares, the biggest for the day.

Argosy Property posted the biggest gain on the NZX50 as it rose 2.6% to $1.17, while Hallenstein Glasson Holdings advanced 2.2% to $10.32 and Vulcan Steel increased 1.9% to $8.08.

Property for Industry fell 1.7%, or 4 cents, to $2.37 after shedding rights to a 2.2 cents per share dividend.

The a2 Milk Co dipped 0.3% to $11.52 after the milk marketing firm said members of its executive team, including managing director David Bortolussi, sold as much as half of the tranches of shares received before 2024, largely to cover tax obligations of the vesting of those rights. Bortolussi still holds shares worth more than four times his minimum requirement and has no intention to sell more outside of covering tax bills.

Bremworth jumped 14% to 76.5 cents after WoolWorks owner David Ferrier’s family interests lifted their stake in the carpetmaker to 10%, telling the National Business Review they believe the company is undervalued with or without the current takeover bid by Mohawk Industries for the firm’s assets.

Michael Hill gained 2.9% to 54 cents after the retailer said like-for-like first-half earnings climbed 29% as the jewellery chain maintained gross margin in the face of rising gold and silver costs. No dividend was declared, but the retailer’s board intends to resume payments at the annual result, provided market conditions allow.

The kiwi dollar traded at 59.86 US cents at 5pm in Auckland, paring an earlier decline and largely unchanged from 59.89 cents on Friday.

Statistics New Zealand figures today showed a 0.2% increase in monthly filled jobs in January, but with revisions to earlier periods dampening what had been a firmer underlying trend.

Reporting by Paul McBeth. Image from Jens Rademacher on Unsplash.