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NZ shares rise as vaccine trial boosts global sentiment

New Zealand shares rose for a third day as investors welcomed interim results of a covid-19 vaccine trial which showed a positive immune response to the virus.

Wednesday, July 15th 2020, 6:05PM

by BusinessDesk

The S&P/NZX 50 Index rose 116.38 points, or 1 percent, to 11,610.52. Within the index, 34 stocks rose and 16 fell. Turnover was $186.9 million.

The experimental vaccine, developed by biotech company Moderna, safely induced an immune response against covid-19 in all 45 participants, researchers reported in The New England Journal of Medicine. Moderna has now announced that a phase 3 test of the vaccine, involving 30,000 people, will begin on July 27 and be completed by late October.

The news helped to spur a rally on equity markets as investors hoped the vaccine would pave the way for fast economic recovery from the virus-induced recession.

Stephen Innes, global market strategist at AxiCorp, said a vaccine would be “the ultimate recession stopper” and reports of progress overwhelmed any negative sentiment from the rising number of virus cases in the United States.

“There is a lot of water to go under the bridge, but any slightly good news on that front is treated warmly by the market,” said Grant Davies, an investment advisor at Hamilton Hindin Greene.

The market had been further supported by stronger than expected economic data in recent weeks, he said.

Asian markets were mixed, Australia’s S&P/NZX 200 was up 1.6 percent while Hong Kong’s Hang Seng Index was down 0.3 percent. That followed a strong night on Wall Street where the S&P 500 and the Nasdaq both gained roughly 1 percent while the Dow Jones Industrial Index rose more than 2 percent.

Davies said “the usual suspects”, or stocks that have been hit hardest by virus related selling, were making gains on the local market in response to the vaccine news.

The benchmark was led higher by Vista Group International, a cinema software developer which is vulnerable to lockdowns. Its shares rose 4.2 percent to $1.25, trimming its year-to-date loss to 63.6 percent.

Auckland International Airport advanced 1.9 percent to $6.09, Tourism Holdings rose 1.7 percent to $1.80 and Air New Zealand increased 1.2 percent to $1.305.

Oceania Healthcare advanced 3.1 percent at $1. The stock has been touted as an alternative option to Metlifecare - in the process of being acquired by a private equity firm - for investors who want long-term exposure to the retirement sector.

Summerset Group Holdings advanced 2.4 percent to $7.35 and Arvida Group rose 2 percent to $1.51. Metlifecare crept closer to the $6 takeover price, rising 0.2 percent to $5.90.

Fisher & Paykel Healthcare rose 2.8 percent to $37.20.

Genesis Energy rose 2.8 percent to $2.94, retracing some of its losses following the sudden announcement the Tiwai Point aluminium smelter would be closed next year.

Davies said the news was still rippling through the market as investors worked through the uncertainty the decision had injected into the energy sector. 

Contact Energy rose 2.1 percent to $5.72. The firm today announced it had rearranged its leadership team to focus on developing capacity and growing demand as the sector goes through a period of transition in preparation of the smelter's closure.

Trustpower fell 0.1 percent to $6.93. It said in an operating report today that retail activity reduced during level 4 lockdown and has been slower to ramp back up than other market participants. Accounts decreased by approximately 2,000 across the quarter.

SkyCity Entertainment Group rose 2 percent to $2.52. Research firm Jarden upgraded SkyCity’s target price, bringing it to $2.85. The addition of equity from the recent capital raising and full earnings recovery now expected by financial year 2023, made the current valuation attractive, the analysts said.  

Napier Port dropped 2.3 percent to $3.45. The company said freight and bulk cargo volumes had rebounded from April but remained below last year’s levels. Bulk cargo volumes were 24 percent lower at 628,000 tonnes, with nine-month volumes down 13 percent at 2.23 million tonnes.

New Zealand Refining Company posted the day’s largest decline, falling 2.8 percent to 69 cents.

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Last updated: 23 October 2020 5:00am

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