MARKET CLOSE: NZ shares join global selloff on weak oil; Kathmandu, Sky TV drop

New Zealand shares joined a global selloff in equity markets on concern the plunging price of crude oil suggests weaker demand and economic growth. Kathmandu Holdings and Sky Network Television declined.

The S&P/NZX 50 Index dropped 34.68 points, or 0.6 percent to 6035.26. Within the index, 35 stocks fell, 10 rose and 5 were unchanged. Turnover was $107.4 million.

Global equity market weakness, spurred by oil prices dropping to a seven-year low of US$37.74 per barrel, saw Asian markets fall today. Japan's Nikkei 225 Index shed 1.9 percent on the afternoon's trading, Australia's S&P/ASX 200 Index dropped 1.5 percent and Hong Kong's Hang Seng fell 1.2 percent.

On Wall Street, stocks fell overnight on the decline in oil and investor nervousness ahead of this week's Federal Reserve announcement, which is widely anticipated to involve interest rate hikes. The Nasdaq Composite Index fell 2.3 percent, the Standard & Poor's 500 Index 1.9 percent and the Dow Jones Index 1.8 percent.

Global uncertainty over oil drove the New Zealand benchmark index down today, said Craig Stent, director at Harbour Asset Management.

"The oil price is not great for some of these commodity producers, there's general sentiment that the world economy is still pretty weak," Stent said. "You're not seeing more demand from people to consume more oil."

New Zealand's stock market is regarded as a low beta, or less volatile market, which typically lags behind moves in offshore markets, partly because many of the local stocks are utilities and property investors, which are very much domestic based, Stent said.

Kathmandu Holdings led the local index lower, falling 3.1 percent to $1.54. The retailer has dropped 26.4 percent this year, though it has recovered somewhat after falling to its equal all-time low of $1.27 in June.

Sky TV dropped 2.6 percent to $4.10. In October, the pay TV provider said it expected profit to fall as much as 11 percent in the 2016 financial year, with largely flat revenue and increased capital expenditure.

"Investors are worried about whether it is transforming," Stent said. "How long a proposition is Sky TV? Can they keep up with what's happening with technology, and keep their subscriber base, in the face of services like Netflix?"

A2 Milk fell 1.9 percent to $1.06, and Z Energy dropped 1.8 percent to $6.67.

Vector was the biggest gainer on the market today, up 1.6 percent to $3.22, a one-month high. The shares have risen 13.3 percent this year, and Stent said the stock was "more of a defensive type company, not really affected by global developments."

Fonterra Shareholders Fund rose 1.4 percent to $5.78. Fonterra Cooperative Group said today that US dairy exports are down due to domestic demand in the world's biggest economy but exports remain strong for Australia and Europe while New Zealand's shipments have slowed.

Outside of the benchmark index, IkeGPS rose 1.5 percent to 70 cents after the measurement tool developer announced it has signed a $1 million deal to sell its MapSight software to an unnamed customer in the US.

TruScreen dropped 3.6 percent to 27 cents. The NZAX-listed cervical cancer test developer narrowed its first-half loss after a decline in sales was countered by a refundable tax offset.

GFNZ Group rose 7.8 percent to 5.5 cents. The finance company formerly known as Geneva Finance posted a 423 percent jump in first-half profit as the lender benefited from an expanded loan book.

(BusinessDesk)