NZ’s market falls almost 2% on global currency volatility

New Zealand’s market was closed yesterday for the Queen Elizabeth Memorial Day holiday but fell almost 2% today due to global volatility from stock and foreign exchange markets.

Tuesday, September 27th 2022, 5:55PM

by BusinessDesk

The S&P/NZX 50 Index fell a significant 220.3 points, or 1.9%, to 11,214.49. Turnover was $156.2 million, higher than recent low volumes.

Devon Funds head of wealth Greg Smith said NZ’s market was still holding up better than global markets – although NZ’s market still sank almost 2%.

“The currencies have been a big talking point,” he said. “We’ve seen a strong US dollar, the pound in the UK collapsing, and a lot of other currencies also weaker, including the NZ dollar.”

Export stocks had been hiked higher due to the NZ dollar continuing to fall, he added.

But although big export stock health manufacturer Fisher & Paykel was up 1% earlier in the afternoon, the company’s stock fell 1% to $18.91 by the end of the day.

Dairy exporter A2 Milk did rise 1.8% to $6.10 however, while global cinema software provider Vista Group was up 1.9% to $1.64.

Smith said it was interesting that Air NZ was lower today – down 3.4% to 70.5 cents – as fuel prices had been “cratering” over the last few months.

The Warehouse has its full-year earnings out tomorrow and the stock was down 0.3% to $3.44.

Today, Briscoe Group fell 0.4% to $5.30 and KMD Brands was down 0.9% to $1.05. Michael Hill jumped 2.3% to $1.31.

Contact Energy was down 0.9% to $7.75. The energy retailer confirmed today that the company is offering up to $200m of five-and-a-half-year fixed rate, unsecured, unsubordinated green bonds to institutional investors as well as NZ retail investors.

The $200m offer also has the ability to accept up to an additional $50m of oversubscriptions at Contact’s discretion, the company said.

Synlait Milk reported a jump in full-year net profit this morning and said it was on track to return to “robust” profitability.

Net profit was $38.5m in the 12 months to July 31, versus a loss of $28.5m in the same period a year earlier.

Smith said it was a positive result and it was good to see the company had strong cashflow. Synlait was down 5.3% to $3.37 by early evening.

Dairy co-op Fonterra Shareholders' Fund Units fell 1.5% to $3.35.

Agribusiness group Scales Corp was down 6.8% to $4.66 after announcing its plans to expand its global pet food and edible proteins division in Australia in a A$27 million investment (NZ$30.8m).

Managing director Andy Borland said the $27m investment demonstrated the commitment Scales had to expand its geographical reach as well as its range of products.

“As demand for proteins increases, access to global supply and key growth markets becomes increasingly important,” he said in a statement.

Pub company Good Spirits Hospitality fell 10.6% to 4.2 cents in very light volume. Vulcan Steel also fell 5.9% to $7.72.

Vulcan Steel’s founder, Peter Wells, told the NZX earlier in the month that he was retiring after being in the job for 27 years.

British pound falls to new low

Nick Smyth, BNZ’s interest rate strategist, said since Friday the UK had become the “centre of attention” after the new government’s chancellor Kwasi Kwarteng announced a major fiscal spending package with considerable tax cuts.

Smyth said the announcement drove people away from the pound which resulted in it dropping to a record low against the US dollar.

Today, the GBP was trading at US$1.074 at 3pm Wellington, down from US$1.122 on Friday.

“The market response to the fiscal package has been an emphatic thumbs down,” Smyth wrote in a note today.

ASB’s chief economist Nick Tuffley summed up the reaction to the falling British sterling in one word this morning: pounded.

“The events triggered by the UK are bringing a much greater focus on the fiscal fragilities of debt-laden governments in a rising interest rate environment,” he said in a note.

Tuffley said the Bank of England’s governor had also made it clear that the BoE wouldn’t lift interest rates to defend the British pound – which in turn could cause the pound to get weaker.

The NZ dollar was trading at 56.87 US cents at 3pm Wellington today, down from 58.45 cents on Friday.

Tags: Market Close