MARKET WRAP: NZ shares hold their ground

Markets are likely to remain volatile in the near term, says Harbour Asset Management's Shane Solly

Shane Solly wraps up today's sharemarket action

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Scroll down for the top gainers and the biggest falls.

The local sharemarket held up well today considering Wall Street’s fall on Friday, although volume was light as investors await the next move from offshore markets.

The S&P/ NZX50 Index gained 51.05 points, or 0.61%, to 8444.32 on turnover worth $90.39 million.

Global markets have been rattled by the emergence of a US China trade spat, with the Trump administration proposing new $US100 billion tariffs on Chinese goods and China responding by working on “comprehensive countermeasures”.

Wall Street also digested disappointing employment data late last week and the Dow Jones industrial average fell 2.34% on Friday. However, most of the focus has been on trade and Trump officials attempted to soften the tone over the weekend, saying no penalties are imminent and there’s time to work out a deal rather than enter into a trade war. 

“This Trump approach to trade discussions looks a bit like professional wrestling,” Shane Solly of Harbour Asset Management said.

“There’s lot’s of talk … and really what we are seeing is the president come out with some very bold threats and then tending to back down.”

That said, the rhetoric around trade tariffs is likely to keep markets volatile in the near term, he added.

The New Zealand sharemarket may have escaped punishment due to a low exposure to cyclical sectors that were buffeted in the US such as industrial technology companies.

Among the notable movements, F&P Healthcare shares rose 47c (3.54%) to $13.73 and Fletcher Building climbed 15c, or 2.56%, to $6.

Fletcher has experienced recent weakness following its earnings downgrades leading to concern the stock could be dropped from the MSCI New Zealand Index.

If that happened some investors might be obliged to reduce their exposure, potentially resulting in further weakness.

Today’s gains took some of the pressure off the stock, Mr Solly said.

Meanwhile, A2 Milk – which had been tipped to replace Fletcher in the MSCI – slipped 5c to $12.92.

The stock has been under pressure since it emerged that competitors are now selling their own A2-branded infant formula product in China.

The shares have come down from a high of $14.10 on March 22 following a remarkable run over the past 12 months.

“We have seen some stronger data showing the company is continuing to grow its share of Chinese online infant formula sales,” Mr Solly noted.

Orion Health showed good gains for the second consecutive day and the shares closed up 8c (11.11%) to 80c.

The surge continued a comeback that began on Friday on the back of trade sale speculation reported by NBR.

Looking ahead to the rest of the week, Mr Solly says there’s plenty to focus on with comments from the US Federal Reserve, the European Central Bank and the Bank of Japan.

Inflation data is due out in the US and in China.

Attention is also turning to the upcoming earnings season in the US, where there is high expectation for increases on the back of a stronger US and global economy. 

“Investors have become more cautious though. If those US companies can meet or beat earnings forecasts that might provide a bit of a boost,” Mr Solly said.

GAINERS

VIL $0.040 $0.010 / 33.33%
OHE $0.800 $0.080 / 11.11%
PGC $0.255 $0.015 / 6.25%
NTL $0.017 $0.001 / 6.25%
SKT $2.440 $0.090 / 3.83%

DECLINERS

AWF $1.800 $-0.050 / -2.70%
PPH $4.150 $-0.110 / -2.58%
SPY $0.195 $-0.005 / -2.50%
USF $6.583 $-0.159 / -2.36%
HBL $1.690 $-0.040 / -2.31%

 


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