New Zealand’s S&P/NZX 50 index joined a broad rally across Asia as investors were generally optimistic about trade talks between the US and China, with President Donald Trump calling the first day positive, if not easy. Infant formula exporter a2 Milk was among the day’s gainers.
Meanwhile, Fisher & Paykel Healthcare rose as US health secretary Robert Kennedy Jr sacked the entire panel which recommends vaccines to the Centers for Disease Control and Prevention director, raising the prospect of a harsher flu season in the company’s biggest market.
Warehouse Group continued its decline as investors flee the retailer set to leave the benchmark index, with replacement Briscoe Group hitting a two-and-a-half year high and Hallenstein Glasson Holdings and KMD Brands also enjoying gains.
And Scales Corp rose after upgrading its earnings guidance, just as the rural Fieldays event is set to showcase the strength of the country’s primary sector.
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The NZX50 rose 25.16 points, or 0.2%, to 12,564.42, with 28 stocks gaining, 21 falling and one unchanged. Turnover across the main board was $118.9 million, returning to more normal levels as Australian markets returned to work from the King’s Birthday long weekend.
Stock markets across Asia were broadly stronger, with the S&P/ASX 200 index up 0.8%, Japan’s Nikkei 225 gaining 0.9% and Hong Kong’s Hang Seng increasing 0.4%.
Investors were upbeat about the first day of negotiations between the US and China, where rare earth minerals and export controls were seen as being at the top of the agenda.
Infant formula exporter a2 Milk – which counts China as its biggest market – rose 2.1% to $8.86, while its supplier Synlait Milk slipped 2.9% to 68 cents. Fonterra Shareholders’ Fund units declined 1% to $6.19.
Apple exporter Scales rose 1.1% to $4.60 after raising its earnings forecast by $3 million to a range of $42 million-to-$45 million with strong growing conditions and positive results from its proteins and logistics divisions.
“There’s still strong Asian demand and good growing conditions for its Hawke’s Bay orchards driving the earnings upgrade,” said Greg Smith, head of retail at Devon Funds Management. “There’s lots of good signs in the wider agri sector.”
The backbone of the economy
Peter McIntyre, an investment adviser at Craigs Investment Partners, said the primary sector has been one of the stars of the economy, with several firms more upbeat about their outlooks as the Fieldays event in Mystery Creek near Hamilton prepares to kick off.
“Farmer optimism and spending is quite elevated,” McIntyre said.
Allied Farmers rose 5.6% to 75 cents, while PGG Wrightson declined 2.4% to $2.04, and NZ Rural Land Co gained 1.1% to 92 cents.
The kiwi dollar traded at 60.51 US cents at 5pm in Auckland from 60.37 cents yesterday.
Index heavyweight F&P Healthcare paced gains on the NZX50, rising 1.8% to $36.76 after US health secretary Robert Kennedy Jr sacked the panel which advises on vaccines.
“Fewer vaccines for the flu will increase the number of cases, which isn’t bad for F&P,” Craigs’ McIntyre said.
Retail revolutions
Hallenstein Glasson led the NZX50 higher, rising 2.5% to $8.20 as investors dropped Warehouse for other retailers ahead of the Red Sheds’ owner’s exit from the index. Warehouse posted the biggest decline on the NZX50, falling 4.4% to 87 cents, while its incoming replacement Briscoe gained 4.6% to $5.65. KMD Brands rose 1.5% to 31.5 cents.
Spark New Zealand was the most heavily traded stock on the day with a volume of 4 million shares as it increased 0.7% to $2.275, while Air New Zealand fell 1.7% to 58.5 cents on a volume of 2.7 million.
SkyCity Entertainment Group fell 3% to 96 cents on a volume of 2.6 million after S&P/Dow Jones Indices said the casino operator will be dropped from the NZX20 index later this month. Gentrack, which will replace SkyCity, fell 3.6% to $11.91.
