The New Zealand dollar dropped below 60 US cents and the S&P/NZX 50 index fell for a third day as investors second-guess whether US President Donald Trump will approve plans to join Israel’s bombing of Iran.
Meanwhile, Statistics New Zealand figures showed the domestic economy grew more than expected in the first three months of the year, although more recent data indicate that growth might be short-lived.
Consumer companies were among the hardest hit on the local stock exchange as KMD Brands hit a new low after warning its earnings remained under pressure and its sales were soft, with Sky Network Television, Hallenstein Glasson Holdings and Warehouse Group at the bottom of the leaderboard.
Trading on the NZX was heavier than usual ahead of the Matariki public holiday on Friday in New Zealand, with investors tweaking their portfolios ahead of index reweightings that came into effect after the bell.
Competing factors
The kiwi dollar dropped to 59.94 US cents at 5pm in Auckland from 60.22 cents at 7am and 60.33 cents yesterday, while the NZX50 dropped 58.27 points, or 0.5%, to 12,569.05 as investors across Asia were nervous about tensions in the Middle East.
US President Donald Trump has reportedly approved plans to attack Iran, while withholding the final order, as Israel continues its airstrikes on Iran’s nuclear and missile facilities.
Stock markets across Asia were broadly weaker, with Singapore’s Straits Times Index down 0.3%, Japan’s Nikkei 225 index falling 0.8% and Hong Kong’s Hang Seng sinking 2%. Australia’s S&P/ASX 200 index has been flat through most of the session, and was recently up 0.1% in late trading.
Meanwhile, the US Federal Reserve’s decision to keep its key rate unchanged, while keeping the door open to future rate cuts, provided little direction for markets.
Local data from Stats NZ showed the local economy grew 0.8% in the three months ended March 31, more than expected by economists and the Reserve Bank.
“There’s a lot of balls in the air,” said Greg Smith, head of retail at Devon Funds Management. “GDP was a little bit better than expected, although a lot’s happened since March.”
Rag trade
Smith said the domestic economy is still struggling and that’s showing up among retailers.
KMD Brands led the NZX50 lower today, sinking 6.8% to 27.5 cents – and hitting an all-time low 27 cents – after gross margins were skinnier in the 10 months to May 25 compared to a year earlier, while group sales were also down.
Consumer stocks were broadly weaker with Sky TV down 4.8% at $2.75 and Hallenstein Glasson falling 3.9% to $7.81.
Warehouse Group sank 3.7% to a record low 78 cents as it exits the NZX50, while replacement Briscoe Group slipped 0.5% to $6.20. Some 5.4 million Warehouse shares changed hands, while 2.4 million Briscoe shares were traded.
Gentrack rose 3.7% to $12.05 as it prepares to join the NZX20 index, while SkyCity Entertainment Group – which is leaving the top 20 – fell 1.1% to 91 cents.
Heavy trading
The settlement session was extended to allow for the S&P/NZX and FTSE Russell index reweightings, with turnover across the main board of $438.7 million, compared to average daily cash trading of $196 million in May.
Kiwi Property Group was the most heavily traded stock on a volume of 12.4 million shares as it fell 1.1% to 88 cents, while Spark New Zealand declined 1.1% to $2.305 on a volume of 10.9 million. Ryman Healthcare dropped 1.3% to $2.24 on a volume of 5.7 million.
NZX was unchanged at $1.50. The Hong Kong Exchange continued its run of new initial public offerings with Chinese soy sauce maker Foshan Haitian Flavouring and Food Co joining the bourse today, while New York had two new strong debuts overnight.
Genesis Energy rose 0.4% to $2.29 after signing a non-binding term sheet with other energy companies to establish a strategic reserve at the Huntly power station. Contact Energy slipped 1% to $8.97 and Meridian Energy declined 0.7% to $5.66, while Mercury NZ rose 1.9% to $6.04.
Outside the benchmark index, Vital gained 7.5% to 43 cents after Tait International formally lodged its 45 cents per share takeover offer for the telecommunications firm.
Scott Technology extended its gains, up 4.2% at $1.99 after yesterday saying its earnings were tracking ahead of the prior year.
Reporting by Paul McBeth. Image from Curious News.
