Serko leads NZX50 lower as tech fears remain

New Zealand’s S&P/NZX 50 index joined the global slide, with travel software firm Serko leading the benchmark lower on Thursday as it neared a two-month low after artificial intelligence startup Anthropic rattled markets with its push into legal services prompting investors to second-guess which software firms will be disrupted by the new technology.

Asian stock markets were broadly weaker as the tech selloff continued, although some of the firms slapped around on Wednesday clawed back losses, with Gentrack and Vista Group International on the green side of the ledger, and ASX-listed Xero up in late trading.

Still, the local benchmark eked out a gain in the shortened week as Vector, Contact Energy and Westpac Banking Corp leading the index, with the local market closed on Friday for the Waitangi Day public holiday.

Santana Minerals posted the steepest decline across the main board as gold prices remained whippy and after the would-be miner said a decision on its fast-track consent application will be coming in late October.

Tech difficulties

The NZX50 decreased 23.27 points, or 0.2%, to 13,444.02, with 26 stocks declining, 23 gaining, and one unchanged. Turnover across the main board was $122.8 million, of which Fisher & Paykel Healthcare accounted for $13.8 million as it slipped 0.3% to $39.90.

The benchmark rose 0.2% in the shortened week, snapping two weekly declines, with Vector posting the biggest gain across the four days, up 3.5% at a four-month high $5. Westpac Banking Corp rose 3.3% for the week to close Thursday at $46.69, while Contact Energy advanced 3.2% to $9.65.

While short, the week captured the leftovers of the sharp reversal in precious metal prices plus the cooling sentiment on software firms after AI firm Anthropic launched a tool for legal use on its Cowork product. Google-parent Alphabet’s 18% jump in fourth-quarter revenue buoyed its own shares in afterhours trading, but S&P futures are pointing to a soft start when Wall Street opens.

Meanwhile, New Zealand’s December quarter jobs data showed an unexpected increase in the headline unemployment rate, due in part to greater participation in the workforce by people looking for jobs.

The NZX50’s decline on Thursday was less marked than most markets across Asia, with Australia’s S&P/ASX 200 index down 0.6% in late trading, while Japan’s Nikkei 225 fell 1% and Hong Kong’s Hang Seng dropped 1.3%.

“The focus has been on margin compression and disruption in software companies, particularly in software-as-a-service,” said Jeremy Sullivan, an investment adviser at Hamilton Hindin Greene. “Xero is down 50% over the last 12 months, and Salesforce, the largest SaaS company is down a similar amount.”

A mixed response

Serko led the NZX50 lower on the day, falling 4.4% to $2.63, its lowest close since Nov 26. Meanwhile, Gentrack and Vista Group International clawed back some of Wednesday’s losses, rising 1.3% to $7 and 5.2% to $1.81 respectively, the latter of which was the biggest gain on the benchmark for the day.

Similarly, ASX-listed Xero clawed back some of its Wednesday slump across the Tasman, up 1.9% at A$82.32 in late trading.

Commercial landlords were broadly weaker on Thursday as investors continue to weigh up whether the Reserve bank will raise the official cash rate this year, with Investore Property down 1.8% at $1.09, Argosy Property declining 1.7% to $1.15 and Stride Property Group slipping 1.6% to $1.245.

Fletcher Building fell 2.4% to $3.68 and retirement village operator Summerset Group Holdings decreased 2.3% to $11.20 after Cotality figures out today showed New Zealand’s housing market remained subdued with its house price index down 1% in January from a year earlier.

Spark New Zealand was the most heavily traded stock on the day, with a volume of 2.6 million shares, as it declined 0.4% to $2.24.

Among other stocks to gain on the day, Napier Port rose 4.7% to $3.79, Tower advanced 2.1% to $1.94 and Ryman Healthcare rose 1.9% to $2.75.

Outside the benchmark index, Santana Minerals dropped 6.8% to $1.17 after the would-be miner said a decision on its consent application for its gold project near Cromwell is due on Oct 29, with the panel convenor using their discretion to work towards a 140-working day statutory deadline.

Mining stocks were also weighed down by the latest fluctuation in gold prices, with gold futures down 1% at US$4,902 an ounce at 5pm in Auckland.

Third Age Healthcare Services rose 0.6% to $5.12. After trading closed, the aged care health firm reported a 17% increase in December quarter profit.

The kiwi dollar fell to 59.84 US cents at 5pm in Auckland from 60.32 cents yesterday.

Reporting by Paul McBeth. Image from Kevin Ku on Unsplash.