by Paul McBeth
New Zealand’s S&P/NZX 50 index joined the global slide in equity markets as government bond yields crept higher on Friday in the US, sending shivers through Wall Street that crept across Asia with oil prices continuing to climb after US President Donald Trump warned Iran that the clock’s ticking on cutting a peace deal.
The a2 Milk Co was among the bigger drags on the local bourse as soft Chinese retail sales missed analysts’ expectations, while Ryman Healthcare led the benchmark lower ahead of its annual earnings next week.
Kiwi Property Group and Gentrack joined the widespread declines after the commercial landlord and utilities software provider respectively delivered earnings in line with forecasts.
And Rakon neared the end of its time as a publicly listed company, with trading of its shares suspended pending next week’s delisting after US manufacturer Bourns triggered the mop-up provisions in its $356 million takeover.
Cool runnings
The NZX50 fell 202.09 points, or 1.6%, to 12,762.92, in its worst day since March 19. Within the index, 41 companies declined, five gained, and four were unchanged. The S&P/NZX 20 index futures contract for June slipped 1.4% to 7,285, with 19 lots traded for a value of 139,000. The NZX20 sank 1.6% to 7,257.65.
Turnover across the main board was $149.2 million, of which Infratil accounted for $19.3 million as it dipped 0.9% to $15.12.
New Zealand’s bourse joined a decline across Asia as subdued Friday trading in Wall Street carried on to the new week. Australia’s S&P/ASX 200 index down 1.3% in late trading, Japan’s Nikkei 225 falling 0.9% and Hong Kong’s Hang Seng falling 1.2%.
Government bond yields have been on the rise as investors weigh up the inflationary impact of the protracted Middle East conflict’s impact on fuel costs, with Brent crude oil futures up 1.8% at US$111.20 a barrel at 5pm in Auckland and the yield on New Zealand’s 10-year government bond up 7 basis points at 4.82%, its highest level since late March.
“We’re following US markets with a bit of a pause in the relative strength of the market rally we’ve seen of late,” said Jeremy Sullivan, an investment adviser at Hamilton Hindin Greene.
The a2 Milk Co was among the biggest drags on the benchmark index, sinking 5.1% to $7.12 after data showed Chinese retail sales rose 0.2% in April, falling short of economists’ forecasts, while fixed investment unexpectedly shrank.
Among other exporters to China, fishing group Sanford declined 2.1% to $7.82 and apple exporter Scales Corp decreased 0.3% to $6.03, while Fonterra Shareholders’ Fund units increased 0.1% to $6.95. Outside the benchmark, Comvita advanced 2.8% to 73 cents.
The kiwi dollar traded at 58.37 US cents at 5pm from 58.43 cents at 7am, down from 58.72 cents last week. Fisher & Paykel Healthcare slipped 1.4% to $32.38.
Ryman Healthcare led the NZX50 lower, sinking 6.1% to $2 while SkyCity Entertainment Group dropped 6% to 54.5 cents.
Early earnings
Gentrack declined 3.7% to $3.95 after reporting a 39% slide in first-half earnings and a dip in revenue, having prepared the market earlier this month with a profit warning. Separately, the firm announced the $24 million acquisition of energy software firm Factor.
Tim O’Loan, research analyst at Amova Asset Management, said the soft result was in line with expectations, with flat revenue driven by delayed projects rather than an underlying demand issue.
“The downgrade and this result both highlight timing risk on deal pipeline, and the market will want evidence that those delayed deals do close,” O’Loan said in a note. “Commentary around the pipeline is no longer sufficient, execution and delivery are critical.”
Meanwhile, Kiwi Property dropped 3.2% to 91 cents after reporting an 8% increase in annual adjusted funds from operations. The commercial landlord flagged a 2.7% increase in the March 2027 dividend.
Tourism Holdings posted the biggest gain on the benchmark index, up 2.3% at $2.20, while Meridian Energy increased 0.5% to $5.88 and Channel Infrastructure advanced 0.3% to $3.18.
Spark New Zealand was the most heavily traded stock on the NZX50, with 3.9 million shares changing hands, as the telco slipped 0.5% to $1.99, while Pacific Edge rose 3.7% to 28 cents on a volume of 6.9 million shares – the most on the wider board.
Outside the benchmark index, AFT Pharmaceuticals decreased 0.3% to $3.48 after hiring Sanford exec Stuart Houliston as its incoming chief financial officer, starting in June.
Rakon shares were suspended ahead of next week’s delisting after Bourns completed its $1.55 per share takeover of the components maker.
Synlait Milk sank 11% to 41 cents. After the bell, the milk processor appointed Katherine Turner as an independent director, replacing Paul McGilvary who left today after a week’s notice.
The Bank of New Zealand-BusinessNZ performance of services index nudged up 2.7 points in April for a reading 48.9, still in contractionary territory.
Stephen Toplis, BNZ head of research, said combined with the sister manufacturing survey, the gauges indicate the economy will struggle in the June quarter as the Middle East conflict dents activity and eats into inventory built up in the first three months of the year.
Paul is a staff writer for Good Returns based in Wellington.
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