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Gold soars on global uncertainty; shares sink

New Zealand shares edged lower and gold hit another record as investors focused on the lingering uncertainty caused by the number of coronavirus cases continuing to rise globally.

Wednesday, August 5th 2020, 5:59PM

by BusinessDesk

The S&P/NZX 50 Index fell 14 points, or 0.1 percent, to 11,757.72. Within the index, 21 stocks fell, 18 rose, and 11 were unchanged. Turnover was $114.7 million.

Gold prices hit yet another all-time high today, breaking through US$2,000 an ounce, while the yield on the 10-year US Treasury bond hit a record low at 0.51 percent.   

“Clearly, investor uncertainty about the global economic outlook is growing rather than receding,” said ASB economist, Mike Jones.

Covid-19 was far from under control globally, but fiscal stimulus was already starting to fade in the United States where the virus is on the rise, he said.

The kiwi dollar traded at 66.4 US cents from 66 cents yesterday as traders stayed on the sidelines ahead of next week’s Reserve Bank policy review. The trade-weighted index was at 71.97 from 71.94.

Martin Rudings, a senior dealer at OMF, said there’s too much uncertainty in the global economy, which underpinned the record prices in alternative assets, such as gold.

Despite rocky global conditions, local labour market data showed the unemployment rate fell to 4 percent in the second quarter of the year, defying expectations of a sharp increase.

However, the data underneath the headline figure was less rosy, total labour market participation fell and 20,000 people who were not working because of the virus were not counted in top-line figure.

When included the number rises to 4.6 percent but still beats economists’ forecasts which were widely north of 5 percent.

NZ’s headline labour market data masked the real level of unemployment, which will show up once the government’s wage subsidies roll off, Rudings said.

Grant Davies, an investment advisor at Hamilton Hindin Greene, said the equity market had taken a risk off mood today, despite showing “cautious optimism” in recent weeks. The benchmark has risen 0.8 percent across the past month.

“While the unemployment figures were good, if you look at what is happening with our major trading partners, there is still plenty of things to worry about,” he said.

Global logistics firm Mainfreight led the market lower, dropping 2.1 percent to $45.50. The stock rose sharply after it held an upbeat annual general meeting last week but is widely exposed to global economic conditions.

In contrast, local carrier Freightways, often considered a bellwether for the local economy, rose 0.1 percent to $7.01.

Fisheries firm Sanford fell 1.6 percent to $6.35 after it announced it would close its Tauranga processing plant owing to low North Island processing volumes. The closure will result in 65 job losses.

Fisher & Paykel Healthcare dropped 0.6 percent to $36.95, while A2 Milk Company rose 0.8 percent to $21.28.

Ryman Healthcare fell for its third consecutive session, dropping 1 percent to $12.77, down 2.5 percent this week. The retirement village company has operations in Victoria, Australia, which has seen a resurgence of covid-19 and a strict new lockdown.

Sky Network Television posted the day’s biggest gain, up 2.4 percent at 13 cents, followed by SkyCity Entertainment group which was up 2.1 percent at $2.48.

Outside the top 50, Pacific Edge dropped 5.2 percent to 73 cents after holding its annual general meeting this afternoon. 

Meanwhile, the kiwi traded at 92.42 Australian cents from 92.71 cents yesterday, 70.15 yen from 70.11 yen, 56.22 euro cents from 56.16 cents, 50.74 British pence from 50.55 pence, and 4.6191 Chinese yuan from 4.6161 yuan.

Tags: Market Close

« Better news out of US and Europe drives NZX rallyNZ shares flat as Tiwai smelter rumours swirl »

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Lender Flt 1yr 2yr 3yr
AIA 4.55 2.55 2.69 2.79
ANZ 4.44 3.15 3.25 3.39
ANZ Special - 2.55 2.69 2.79
ASB Bank 4.45 2.55 2.69 2.79
Bluestone 3.49 3.49 3.49 3.49
BNZ - Classic - 2.55 2.69 2.79
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 3.15 3.29 3.39
BNZ - TotalMoney 4.55 - - -
CFML Loans 4.95 - - -
Lender Flt 1yr 2yr 3yr
China Construction Bank 4.49 4.70 4.80 4.95
China Construction Bank Special - 2.65 2.65 2.80
Credit Union Auckland 5.45 - - -
Credit Union Baywide 5.65 3.95 3.85 -
Credit Union South 5.65 3.95 3.85 -
First Credit Union Special 5.85 2.95 3.45 -
Heartland 3.95 2.89 2.97 3.39
Heartland Bank - Online - - - -
Heretaunga Building Society 4.99 3.85 3.95 -
HSBC Premier 4.49 2.45 2.60 2.65
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 3.69 2.45 2.65 2.79
Kainga Ora 4.43 2.93 3.07 3.24
Kiwibank 3.40 3.30 3.54 3.54
Kiwibank - Offset 3.40 - - -
Kiwibank Special 3.40 2.55 2.79 2.79
Liberty 5.69 - - -
Nelson Building Society 4.95 3.45 3.49 -
Pepper Essential 4.79 - - -
Resimac 3.39 3.35 2.99 3.35
SBS Bank 4.54 3.05 3.19 3.25
Lender Flt 1yr 2yr 3yr
SBS Bank Special - 2.55 2.69 2.75
The Co-operative Bank - Owner Occ 4.40 2.55 2.69 2.79
The Co-operative Bank - Standard 4.40 3.05 3.19 3.29
TSB Bank 5.34 3.29 3.45 3.59
TSB Special 4.54 2.49 2.65 2.79
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Westpac - Offset 4.59 - - -
Westpac Special - 2.55 2.69 2.79
Median 4.55 3.00 3.13 3.02

Last updated: 1 October 2020 9:07am

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