by Paul McBeth
New Zealand’s S&P/NZX 50 index fell for a fifth week as hopes faded for a swift end to the Middle East conflict as US President Donald Trump’s national address ratcheted up the rhetoric instead of laying out an expected exit from Iran.
KMD Brands was at the bottom of the leaderboard for the week as the shares more than halved, despite only coming back to trade on Thursday, after completing its deeply discounted capital to shore up its balance sheet.
Despite the souring mood, the NZX50 ended Thursday in positive territory in a broad-based rally before the long Easter weekend, with Channel Infrastructure among gainers after confirming it’s working to expand onshore diesel storage, while Ebos Group led the benchmark higher.
Meanwhile, power companies were back on the rise with energy in the headlines with the sector’s annual conference underway in Wellington, Contact Energy’s proposed Southland wind farm getting resource consent and Simeon Brown adding the portfolio to his ministerial workload in prime minister Christopher Luxon’s cabinet reshuffle.
Not quite what was expected
The NZX50 rose 76.28 points, or 0.6%, to 12,902.15 on Thursday, trimming its weekly decline to 0.3%.
The local benchmark pared earlier gains during the session after US President Trump’s national address sought to make the case for the war on Iran to the nation rather than map out an exit from the conflict, as had been anticipated.
Trump said the US will meet its military objectives very shortly and wants a diplomatic end to the conflict, but will hit Iran “extremely hard” in the coming weeks, with the Strait of Hormuz – a key oil channel – opening up once the conflict ends.
“It was notable not for what he did say, but what he didn’t say – ceasefire or troops weren’t mentioned and that was quite telling,” said Greg Smith, investment specialist at Generate Investment Management. “Uncertainty’s going to linger for a few weeks longer.”
KMD Brands posted the steepest decline for the week, sinking 55% to 8.8 cents, albeit in the one day of trading as it returned from a halt to allow for a steeply discounted $65.3 million capital raising at 6 cents a share.
Fletcher Building also had a rough week, falling 7.4% to end the Thursday session at $2.89, hitting a 10-month low as the Middle East conflict threatens to derail New Zealand’s economic recovery.
“New Zealand had a pretty tough time and was just coming into its recovery, but that’s been squashed,” Generate’s Smith said.
Still, the NZX50 fared better than most markets across Asia on Thursday, clawing back some of its losses from the day earlier when it was out of synch with its peers. Brent crude oil futures climbed 5.3% to US$106.49 a barrel at 5pm in Auckland, while the kiwi dollar gave up its overnight gains, falling to 57.14 cents from 57.33 cents yesterday.
Australia’s S&P/ASX 200 index fell 1.1% in late trading, while Japan’s Nikkei 225 dropped 2.3% and Hong Kong’s Hang Seng declined 1.1%.
Time for a break
Within the NZX50, 30 stocks gained, 16 fell, three were unchanged and Goodman Property Trust remained halted as it corporatises and adopts a stapled security structure.
Turnover across the main board was $137.5 million, of which Fisher & Paykel Healthcare accounted for $20.8 million as it fell 1.6% to $36.70.
Ebos led the NZX50 higher on Thursday, up 4.7% at $23, while Channel Infrastructure advanced 3.4% to $3.04 after confirming it’s working with the government to add another 93 million litres of onshore diesel capacity at its Marsden Point import terminal in the next two months.
Power companies were among those buoying the benchmark on the day, with plenty of discussion about the state of the sector and threats to separate the generation and retailing arms by political parties in the run up to the November election.
Contact Energy gained 1.7% to $9.38 after its proposed windfarm in Southland was granted resource consent under the government’s fast-track process, while Mercury NZ advanced 1.8% to $6.30, Meridian Energy rose 0.6% to $5.45 and Genesis Energy increased 0.5% to $2.17. Lines company Vector climbed 0.6% to $4.78.
KMD Brands posted the steepest decline on the NZX, with the heaviest volume traded of 2.8 million shares. Briscoe Group, which owns a stake in KMD, declined 2.4% to $4.53.
Meanwhile, interest rate sensitive companies were knocked as the yield on New Zealand’s 10-year government bond rose 12 basis points to 4.73%. The Treasury’s Debt Management unit sold $450 million of bonds maturing in 2030 and 2036, with the shorter notes overbid by 3.3 times and the longer-dated notes 2.7 times.
Tech companies Vista Group International fell 3.2% to $1.64 and Gentrack dipped 3.1% to $6.57, while Oceania Healthcare slipped 2.9% to 68 cents and Fletcher was down 2% on the day.
Paul is a staff writer for Good Returns based in Wellington.
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