NZ shares consolidate from Friday rally

New Zealand shares generally fell as the market retreated from Friday’s index fund sugar rush and declined with the ASX.

Monday, September 20th 2021, 7:17PM

by BusinessDesk

The S&P/NZX 50 Index rose 55.97 points, or 0.4%, to 13,178.58. Turnover was $133 million.

After a strong finish to last week, with many stocks rallying as key indices were rebalanced, NZ shares opened lower on Monday.

Some of last week’s top performers had the day’s biggest declines: Pushpay Holdings dropped 4.5% to $1.87 after climbing 6.5% across last week.

Cancer diagnostics firm Pacific Edge was down 1.3% today, having climbed 7.2% last week.

The market was further weakened by a 2% decline on the ASX, which saw mining stocks fall in value as iron ore prices continue to drop on steel production cuts in China.

Commonwealth Bank has estimated that every US$10 decline in iron ore’s price equates to $6.5 billion in nominal GDP for Australia.

Steel & Tube Holdings was up 1.9% at $1.06, although it was bouncing from a five-month low it hit on Friday.

NZ Automotive Investments dropped 9.1% to $1 as investors reacted to its founders sell down of approximately 9% of the company from $4 million.

The placement was completed during the Friday session and the stock was in a trading halt until the last few minutes of trading, forcing most investors to react on Monday morning.

Mainfreight founder and director, Bruce Plested, also reported he had sold around $4.3m of shares in his company today.

The sell-down is only a fraction of his stake worth close to $1.4b at the average price of $92.58 at which he sold this week.

Shares in Mainfreight slipped 0.4% to $91.40 today, while domestic competitor Freightways declined 0.3% to $12.79.

Meanwhile, Move Logistics fell 3.9% to $1.50 after it told investors it had taken a hit from the ongoing level four lockdown in Auckland.

While the region will move to level three tomorrow, the decline in economic activity has impacted the company’s fuel division which will result in a negative impact on its first-half earnings.

The third factor weighing down the share market is market interest rates, which moved to their highest level since May 2019 after strong GDP data.

Markets are fully pricing in a 25 basis point increase in the Reserve Bank of NZ's official cash rate in October, and a 41% likelihood of a 50 basis point hike.

Economists have noted that speech notes being released by Assistant Governor Christian Hawkesby’s speech tomorrow morning could be market moving if it hints which way the bank might go.

“Tuesday’s speech could yet influence thoughts between a 25 and 50 point increase. What is clear is that you should tune into the speech if you’re able,” BNZ economist Craig Ebert said 

The New Zealand dollar, which dropped below 71 US cents on Friday, failed to pick up throughout the session and was trading at 70.30 US cents by 3pm in Wellington.

Tags: Market Close

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