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Stock rally stalls as US virus response disappoints

New Zealand shares turned around an early rally as a lack of follow-through from the US on how it would respond to the covid-19 outbreak disappointed investors.

Wednesday, March 11th 2020, 8:05PM

by BusinessDesk

The S&P/NZX 50 Index rose as much as 2.7 percent in early trading as investors recovered some lost confidence after a savage start to the week. The stand-off between Russia and Saudi Arabia over oil production added more uncertainty to an environment where a global recession remains a live threat in the face of the virus outbreak.

But the local benchmark index ended the day down 23.87 points, or 0.2 percent, at 10,873.60. Within the index, 22 stocks fell, 26 rose, and two were unchanged. Turnover was heavier than usual at $247.9 million.

Shane Solly, a portfolio manager at Harbour Asset Management, said the initial rally was on the expectation that US President Donald Trump would announce a more detailed response to the virus outbreak. When that didn't happen, financial markets soured.

“One of the things, globally, that people are looking for is monetary and fiscal stimulus, so that’s going to be quite important,” he said.

“The market tried to have a rally, but it didn’t last very long.”

New Zealand’s NZX outperformed Australia, where the S&P/ASX 200 Index was down 2.9 percent in afternoon trading.

Solly said Australia’s financial sector was among the hardest hit as investors weigh up what further interest rate cuts by the Reserve Bank of Australia would do to banks’ margins.

Of the dual-listed lenders, Australia & New Zealand Banking Group fell 4.1 percent to $20.90 on the NZX and Westpac Banking Corp was down 3.3 percent at $20.40. Heartland Group Holdings, which operates Heartland Bank and a reverse mortgage business in Australia, rose 3.4 percent to $1.50.

Sky Network Television led the market lower, falling to 9.8 percent to 46 cents, a new low.

Summerset Group fell 5.2 percent to $6.58 and Ryman Healthcare declined 1.7 percent to $14.20. Metlifecare increased 0.3 percent to $6.79, Arvida Group rose 1.9 percent to $1.60 and Oceania Healthcare advanced 3.1 percent to $1.01.

Solly said some investors were wary of the retirement and aged-care stocks because their residents were vulnerable to the virus, despite “the amazing record” of the operators who are well-versed to deal with those types of issues.

“They do a great job, so it is interesting that the market has decided it’s an issue when in fact these are the best-placed operators to deal with it,” he said.

Utilities were stronger as investors reassessed the value of dividend yields from the likes of the electricity generator-retailers.

Meridian Energy rose 2.8 percent to $4.43, Mercury NZ advanced 2 percent to $4.71, and Trustpower increased 1.9 percent to $6.30.

Synlait Milk declined 3.2 percent to $5.10. The milk processor today bought land adjacent to its Dunsandel plant for $25.7 million, which it said would give it greater control over water rights, help reduce its truck movements, and let it carry out on-farm research.

A2 Milk, which is Synlait’s second-biggest shareholder and counts it as a supplier, was unchanged at $16.10.

Stride Property posted the day’s biggest gain, up 3.9 percent at $2.13.

Air New Zealand increased 0.8 percent to $1.92. The carrier had climbed as much as 10 percent in early trading.

Auckland International Airport was the most traded stock on a volume of 6.4 million shares, four times its three-month average. It decreased 0.3 percent to $7.73.

Outside the benchmark index, AFT Pharmaceuticals rose 5.1 percent to $3.89, extending its gain yesterday when it said the virus outbreak had boosted demand, and that its annual sales would be at the top end of guidance.

Green Cross Health, which runs the Unichem and Life Pharmacies chains, rose 6.2 percent to $1.20.

Comvita increased 2.1 percent to $1.93. The honey products maker said its February performance was in line with forecast, with strong online sales offsetting declines in traditional retail stores and duty free sales

Tags: Market Close

« NZ shares recover in modest decline as cooler heads prevailTrump travel-ban drives NZX50 to nine-month low »

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Lender Flt 1yr 2yr 3yr
AIA 4.55 3.55 3.89 3.99
AIA Special - 3.05 3.39 3.69
ANZ 4.44 3.55 3.85 4.49
ANZ Special - 3.05 3.35 3.99
ASB Bank 4.45 3.55 3.89 3.99
ASB Bank Special - 3.05 3.39 3.69
Bluestone 4.44 4.44 4.29 4.34
BNZ - Classic - 3.09 3.35 3.69
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 3.75 4.10 4.55
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BNZ - TotalMoney 4.55 - - -
China Construction Bank 5.50 4.70 4.80 4.95
China Construction Bank Special - 3.15 3.15 3.19
Credit Union Auckland 5.95 - - -
Credit Union Baywide 5.65 4.75 4.75 -
Credit Union North 6.45 - - -
Credit Union South 5.65 4.75 4.75 -
Finance Direct - - - -
First Credit Union 5.85 3.99 4.49 -
Heartland 3.95 2.89 2.97 3.39
Heartland Bank - Online - - - -
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Heretaunga Building Society 4.99 4.35 4.45 -
HSBC Premier 4.49 ▼2.95 ▼3.09 ▼3.50
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 5.15 3.18 3.18 3.20
Kainga Ora 5.18 3.94 4.08 4.39
Kiwibank 4.40 3.84 4.14 4.40
Kiwibank - Capped - - - -
Kiwibank - Offset 4.40 - - -
Kiwibank Special - 3.09 3.39 3.65
Liberty 5.69 - - -
Lender Flt 1yr 2yr 3yr
Napier Building Society - - - -
Nelson Building Society 4.95 ▼4.09 4.15 -
Pepper Money Near Prime 5.64 - 5.44 5.44
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Pepper Money Specialist 7.59 - 7.39 7.39
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RESIMAC Special - - - -
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The Co-operative Bank - Owner Occ 4.40 3.25 3.45 3.69
The Co-operative Bank - Standard 4.40 3.75 3.85 4.19
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TSB Bank 5.34 ▼3.89 ▼4.15 ▼4.49
TSB Special 4.54 ▼3.09 ▼3.35 ▼3.69
Wairarapa Building Society 4.99 3.95 3.99 -
Westpac 4.59 4.15 4.09 4.49
Westpac - Offset 4.59 - - -
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Median 4.60 3.65 3.89 3.99

Last updated: 31 March 2020 8:55am

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