Topsy turvy market conditions continue; NZX snaps 3 day losing streak

New Zealand shares snapped a three-day decline as global oil prices stabilised and upbeat investment sentiment on Wall Street flowed through to the local market. Refining NZ bounced back from yesterday's sharp drop.

Thursday, April 23rd 2020, 6:40PM

by BusinessDesk

The S&P/NZX50 Index rose 28.44 points, or 0.3 percent to 10,446.11. Within the index, 35 stocks increased, 11 fell, and four were unchanged. Turnover was $144.8 million.

Investor sentiment improved after a strong lead from Wall Street where investors were buoyed by news of a US$500 billion stimulus package pushed the three benchmark indices at least 2 percent higher. This was accentuated by Brent crude oil prices recovering from a 21-year low, levels which stoked concern about the global economy's outlook.

Sam Trethewey, a portfolio manager at Milford Asset Management, said the oil price recovery had helped local fuel stocks find support again.

“The local stories have been New Zealand Refining and Z Energy benefiting from the stabilisation in oil prices overnight,” he said. 

The refinery operator led the market higher, up 8.4 percent at 90 cents - although still down 7.8 percent this week. It was up as high as 96 cents today.

“The refinery has been particularly volatile on the news, down 10 percent yesterday and then coming up 14 percent today.”

Z Energy increased 2.9 percent to $3.15, off 2.8 percent this week. New Zealand Oil & Gas rose 4.1 percent to 50.5 cents.

Argosy Property today recorded a full-year portfolio revaluation gain of $61.7 million, or 3.6 percent. Of this, $50.8 million was booked in the 30 September 2019 interim results.

While the industrial and office components of the portfolio gained value, large format retail fell 6.5 percent as the covid-19 crisis impacted rental and vacancy assumptions. Argosy’s share price rose 2.9 percent to $1.08.

Trethewey said retirement village operators received a boost after Housing Minister Megan Woods today confirmed private open home viewings would be able to take place at alert level 3. Combined with indications from the Reserve Bank that it may remove loan-to-value restrictions for home buyers, that would improve liquidity in the housing market.

“That is positive for retirement stocks who are reliant on the property market transacting, to allow incoming residents to sell their house and move into a village,” Trethewey said.

Summerset Group rose 2.6 percent to $6.31, Ryman Healthcare advanced 4.6 percent to $12.50, Arvida Group increased 3 percent to $1.33, and Metlifecare edged 0.2 percent higher to $4.13.

Vital Healthcare Property Trust climbed 1.6 percent to $2.49.

Synlait Milk rose 2.3 percent to $7.10. Trethewey said it was up on the strength of A2 Milk’s recent update, showing increased sales during the virus outbreak. Synlait is the major supplier of A2 products. A2 fell 0.8 percent to $19.60.

Genesis Energy trimmed its full-year earnings guidance by $5 million, citing lower-than-expected production from its Tekapo and Waikaremoana hydro schemes due to drought in the North Island. The shares rose 1.1 percent to $2.81.

“It was small reduction to its guidance with the dividend remaining intact. The market is happy to look through that,” Trethewey said.

Mercury NZ, which also trimmed its guidance earlier this week, rose 0.2 percent to $4.36.

Contact Energy rose 1.5 percent to $6.22 and Meridian Energy increased 0.2 percent to $4.37.

Auckland International Airport today reported international passenger numbers were down 95.3 percent in the first 20 days of April, with the border closed to all non-residents. The airport, already operating at just 10 percent of capacity, said it expects this downturn to continue in the weeks ahead.

Trethewey said the market was anticipating a “bleak” few months for the company and the announcement was no surprise to investors.

“The stock continues to be reasonably well supported now that the company has sorted out its balance sheet following the capital raise earlier this month,” he said.

The airport’s shares rose 0.9 percent to $5.79 and its main airline partner, Air New Zealand, rose 0.4 percent to $1.28. The airline has said it is expecting to operate largely as a domestic operation for the foreseeable future.

Media company, NZME fell 12.2 percent to 21.5 cents after the government announced a $50 million support package aimed at propping up the endangered media sector

“Clearly investors don’t think the $50 million does enough to solve the issues facing the company at the moment,” Trethewey said. 

Broadcasting Minister Kris Faafoi himself underscored this first phase of support alone would "not be sufficient to see the sector through a prolonged period of restrictions and reduced advertising.”

Sky Network Television rose 1.7 percent to 30 cents.

Tags: Market Close

« NZ shares fall; oil price plunge weighs on Refining NZNZ shares fall as investors wait for economy to reopen »

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