NZ sharemarket down ahead of big US election

An uncertain New Zealand sharemarket was down for the second day running, but business confidence continues to improve, reaching a 10-year high.

Thursday, October 31st 2024, 6:32PM

by BusinessDesk

The S&P/NZX 50 Index had another roller-coaster ride and closed at 12,644.75, down 50.9 points or 0.39% after reaching an intraday high of 12,715.93 and low of 12,640.08.

There were 51.3 million share transactions worth $209.66m.

'Greater optimism'

Greg Smith, head of retail with Devon Funds Management, said the market had a weak lead from Wall Street and it was waiting for the big events of the US presidential election and Federal Reserve meeting next week.

He said the latest ANZ Business Confidence survey was positive, and there seems to be new optimism about the future, even though the here and now is still challenging.

“There’s evidence that the official cash rate cuts are now translating into greater optimism, but worsening job security is a concern.”

The October survey saw business confidence rise another five points to 65.7, up from 60.9 in September, a fresh 10-year high, and expected own activity edged up from 45.3 to 45.9 points, with manufacturing being more positive.

Export intentions increased from 13.8 to 17.1, the highest since September 2018, and investment intentions surged from 9.2 to 20 points, the highest since June 2021.

ANZ said a smaller net proportion of firms are now reporting that activity is lower than a year earlier, with the sharpest lift for respondents in the construction sector.

“That said, both past activity and employment are still in negative territory economy wide. So, the pressure remains on. That’s particularly true of the retail sector, with reported past activity yet to turn higher for this sector. “

This likely reflects that for consumers, the positive impact of lower interest rates is being offset by worsening job security, ANZ said.

In the United States, the first two of the Magnificent Seven tech stocks have reported increased earnings. Alphabet, owner of Google, was up 1.66% to US$171.14 (NZ$286.60) after reporting a 34% increase in third quarter profit to US$26.3m and 15% gain in revenue to US$88.3b, both exceeding analysts’ expectations.

Microsoft’s revenue grew 16% to US$65.6b, and net income rose 11% to US$24.7b, with the Azure cloud infrastructure business growing faster than predicted.

Both stocks drifted in after-hours trading, with Microsoft down 3.71% to US$416.60 and Alphabet down 0.58% to US$175.12.

Local stocks

At home, Ebos Group declined 50c to $36.50; Summerset was down 13c to $12.39; Chorus decreased 13c to $8.76; Contact Energy eased 11c to $8.59; and Spark shed 9c or 3% to $2.91 after reducing its earnings and dividend guidance to the day before.

Infratil, down 30c or 2.33% to $12.60, has terminated a conditional agreement with HKT Trust to accelerate the growth of the Hong Kong-based Console Connect global connectivity business. Conditions relating to the partnership were not satisfied within the agreed timeframe.

Wine exporters Delegat Group declined 15c or 2.83% to $5.15, and Foley Wines fell 4c or 5.13% to 74c.

In the property sector, Stride was down 3c or 2.21% to $1.39, and Vital Healthcare Trust declined 7c or 3.5% to $1.93.

Other decliners were Restaurant Brands, decreasing 19c or 5.25% to $3.43; Eroad, down 3c or 3.16% to 92c; The Warehouse, easing 2c or 2.19% to $1.03; and Vista Group, shedding 5c or 1.71% to $2.88.

Rakon decreased 2c or 2.74% to 71; PaySauce was down 1.5c or 6.98% to 20c; and RTO Limited (formerly Blackwell Global Holdings), which has had a share consolidation, fell 2.5c or 10.2% to 22c.

Fisher and Paykel Healthcare was up 34c to $35.99; Briscoe Group rose 27c or 5.57% to $5.12; Tower added 4c or 3.08% to $1.34; Serko collected 8c or 2.34% to $3.50; Vulcan Steel gained 16c or 1.94% to $8.42; and Smartpay was up 2c or 3.03% to 68c.

Promisia Healthcare was up 2c or 3.77% to 55c. Before its one for 500 share consolidation (reduction) at the end of last month, the stock was sitting at 1c.

SkyCity was unchanged at $1.37 after confirming full-year operating earnings (ebitda) of $245m-$265m at its annual meeting.

SkyCity told shareholders that the tough conditions are expected to continue into next year as consumer discretionary spend is forecast to be subdued with an improving outlook in the second half of the year. SkyCity said the change to eliminate cash and move to 100% carded play would initially impact unguarded revenue by 15-20%.

Rua Bioscience, unchanged at 4.8c, is now considering legal options after Awa Ora Genesis Kaitiaki Harakeke Trust of Te Araroa failed to pay the $1.3m purchase price for its medicinal cannabis manufacturing facility in Gisborne by Oct 30.

The trust told Rua it intends to complete the purchase and requested more time before settlement.

TruScreen, down 0.001c or 5% to 1.9c, has been ranked in the top six global women’s health startups with its cervical cancer screening methods.

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