Late surge lifts sharemarket into positive territory

The New Zealand sharemarket staged a late surge, but Fletcher Building had a bumpy day after revealing its Australian subsidiary was under investigation for a leaky pipe product.

Monday, April 17th 2023, 6:28PM

by BusinessDesk

The S&P/NZX 50 Index was trading flat till the last 45 minutes when it shot up nearly half a percent to 11,936.15, finally gaining 55.58 points or 0.47% after reaching an intraday low of 11,826.51.

There were 77 gainers and 55 decliners over the whole market on volumes of 33.32 million shares worth $91.63m.

The market is this week looking out for Thursday’s release of the March quarter consumer price index.

ANZ Research expects annual inflation to be steady at 7.2% – just below the Reserve Bank of NZ’s (RBNZ) forecast of 7.3%. ANZ is predicting non-tradable (domestic) inflation to increase from 6.6% to 6.8%, and tradable (imported goods) inflation to fall from 8.2% to 7.4%.

“Our forecast is for a follow-up 25 basis points official cash rate hike in the May monetary policy statement, taking the rate to 5.5%, which appears to be the (Reserve Bank) committee’s happy place where they can watch, worry and wait,” said the ANZ Bank.

Greg Smith, head of retail for Devon Funds Management, said the battle for the RBNZ is that inflation is not coming down quickly enough.

“It has been painstakingly slow and one of the contributors is food prices running at an annual increase of 12.1%.”

Banks strong

He said markets were heartened by a solid start to the latest United States earnings season, with the banks reporting strong quarterly results – including JP Morgan Chase’s record revenue of US$39.3 billion (NZ$63.42b).

The banks are not sounding too many alarms over the recent banking crisis, and investors have moved on, said Smith.

At home, Fletcher Building declined 7c or 1.51% to $4.56 (reaching an intraday low of $4.42) after telling the market that its subsidiary company Iplex was being investigated by the Western Australian building regulator for leaky pipes.

Iplex Australia has increased its provision from A$2m to A$15m (NZ$16.23m) to support builders and plumbers who installed Pro-fit pipes found to be defective. About 1,200 of the 15,000 houses built in Western Australia between mid-2017 and mid-2022 are believed to have been affected.

Smith said on the face of it, the issue was “fairly immaterial” to Fletcher but there were unknowns about the end result.

“It’s not a big deal in terms of the numbers (A$15m provision) but there’s a question of whether it becomes a bigger problem and that’s what the market is nervous about.”

Smith said Fletcher is a cyclical stock that is already trading at a big valuation discount because of the slowdown in the housing market.

Leaders rise

Fisher and Paykel Healthcare was up 51c or 1.93% to $26.95; Meridian Energy added 5c to $5.25; Spark gained 7c to $5.12; and Auckland International Airport increased 11c to $8.66.

Australian dual-listed stocks Ampol collected 68c or 2.08% to $33.44; ANZ Bank added 53c or 2.06% to $26.20; and Westpac was up 30c to $24.15.

Other gainers were Napier Port up 9c or 3.37% to $2.76; Colonial Motor Company adding 18c or 2% to $9.16; Green Cross Health rising 5c or 3.7% to $1.40; and MHM Automation increasing 3c or 3.19% to 97c.

KMD Brands gained 3c or 2.75% to $1.12; Hallenstein Glasson was up 7c to $5.38; NZME added 2c or 1.94%; and Rakon increased 3c or 3.57% to 87c.

In the retirement sector, Oceania Healthcare gained 2c or 2.86% to 72c; Arvida Group was also up 2c or 1.92% to $1.06; and Summerset Group was down 12c to $8.28.

Manawa Energy, down 1c to $4.92, reported that fourth-quarter generation volumes increased 55% to 461GWh compared with the same period last year. North Island volumes were 88% higher and South Island 24%.

Manawa’s full-year generation is 9% ahead of the previous corresponding period with 1,917 gigawatt-hours (GWh) compared with 1,760 GWh.

Port of Tauranga declined 10c to $6.30; Marsden Maritime Holdings was down 12c or 2.27% to $5.17; Freightways decreased 10c to $9.31; Heartland Group was down 3c or 1.85% to $1.59; and Sky TV shed 5c or 1.88% to $2.61.

Move Logistics shed 3c or 3.26% to 89c; Scott Technology was down 9c or 3% to $2.91; Gentrack declined 10c or 3.17% to $3.05; Eroad decreased 2c or 3.32% to 60c; and Millennium & Copthorne Hotels NZ was down 6c or 2.79% to $2.09.

Tags: Market Close