NZX50 drops after AIA capital raise completed

The New Zealand sharemarket bided its time with a small fall as it waited for key economic events that will dictate the course of interest rate cuts.

Tuesday, September 17th 2024, 6:25PM

by BusinessDesk

The S&P/NZX 50 Index was solid in the morning but then dipped in the afternoon to close at 12,671.95, down 32.44 points or 0.26%.

There were 55 gainers and 70 decliners on the main board with 37.66 million shares worth $173.18m changing hands.

The volumes were dominated by Fisher and Paykel Healthcare, declining 37c to $38.03, and Auckland International Airport, down 3c to $7.51, on trades worth $36.6m and $30.76m respectively.

Auckland airport resumed trading following the completion of its $1.2 billion institutional placement at $6.95 a share. The airport company will be raising a further $200m through a retail offer to shareholders.

On Wall Street, the Dow Jones Industrial Average reached an all-time high in anticipation of interest rate cuts, climbing 228 points or 0.55% to 41,622.08 and beating the previous best close of 41,563.08 on Aug 30.

All eyes are now on the US Federal Reserve meeting and the size of the first cash rate cut in more than four years after a two-decade high reaching 5.25 to 5.5%.

Analysts are predicting a reduction anywhere from 25 basis points to 50 basis points. The decision will be announced Thursday morning (NZ time).

ASB said there is a good chance the Fed will do what no other major central bank has done and start with a big cut instead of a measured one.

Attention will then turn to the release of New Zealand’s second-quarter gross domestic product (GDP), with ASB predicting a further 0.3% contraction, “which is not a great figure to be forecasting".

"But once we get past the energy-blighted third quarter, we are hopeful that GDP will be back in the black. The Reserve Bank is forecasting a 0.5% fall, which is shaping up to be at the bottom of the range of expectations.” ASB said with financial markets pricing in 1% of cuts by year-end, the risks are that GDP holds up better than the Reserve Bank has factored in and the bank is less likely to cut the official cash rate (OCR) by large amounts this year.

Mark Lister, investment director with Craigs Investment Partners, said Thursday is a big day. “The decision by the Federal Reserve, the world’s biggest central bank, will be an important turning point.

“It’s a coin toss between a cut of 25 and 50 basis points but it will be the first of many as inflation (in the US) is back to 2.5% and the job is done,” he said.

On the NZ market

Freightways fell 33c or 3.5% to $9.10; Manawa Energy declined 12c or 2.3% to $5.10; Ryman Healthcare shed 9c or 1.92% to $4.60; a2 Milk eased 10c to $5.83; and Vulcan Steel was down 22c or 2.61% to $8.21.

Other decliners were Colonial Motor Co falling 31c or 4.43% to $6.69; 2 Cheap Cars down 2c or 2.74% to 71c; Scales Corp shedding 10c or 2.78% to $3.50; NZME easing 2c or 1.98% to 99c; and Santana Minerals decreasing 5c or 2.18% to $2.24.

SkyCity was down 4c or 2.8% to $1.39; Goodman Property Trust declined 4c or 1.86% to $2.11; Delegat Group shed 17c or 2.88% to $5.73; and Fonterra Shareholders’ Fund decreased 9c or 1.92% to $4.60.

Contact Energy, up 1c to $8.22, is planning a $200m green bonds offer with the ability to accept oversubscriptions. The offer is expected to open next week.

Pacific Edge continued a strong run, rising 2c or 15.38% to 15c after closing at 8.6c on Aug 24.

Software firm Blackpearl Group has more than doubled in three weeks after gaining a further 16c or 10.46% to $1.69. It closed at 79c on Aug 14.

Tourism Holdings was up 4c or 2.01% to $2.03; Solution Dynamics increased 8c or 6.5% to $1.31; PGG Wrightson gained 4c or 2.15% to $1.90; and Steel & Tube added 3c or 3.3% to 94c.

Private Land and Property Trust gained 4.3c or 3.26% to $1.36; Eroad increased 4c or 3.39% to $1.22; and Being AI was up 2c or 3.45% to 60c.

As for the dual-listed banking stocks, ANZ was up $1.02 or 3.06% to $34.38, and Westpac added 42c to $35.83.

Heartland Group, down 1c to $1.05, told the market it co-operated fully with the Financial Markets Authority over an insider trading allegation against a former junior employee, who appeared in the Auckland District Court. The alleged insider trading occurred in 2020 and 2021.

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