MARKET CLOSE: Shares fall; Fletcher drops on concrete concerns; MRP, Spark decline

New Zealand shares fell, paced by Fletcher Building after a subsidiary used faulty materials in a major construction project. Spark New Zealand, Xero and MightyRiverPower fell in a broad-based sell-off as offshore weakness weighed on the local exchange.

The NZX 50 Index fell 22.522 points, or 0.4 percent, to 5765.269. Within the index, 21 stocks fell, 14 rose and 15 were unchanged. Turnover was $115 million.

Fletcher dropped 1 percent to $8.30. The building and construction supplies firm revealed yesterday its subsidiary Firth has used faulty concrete in the construction of New Zealand's largest motorway project and will have to rebuild part of the Waterview build. Construction has also stopped at some other sites, including Auckland University, where Firth used the material.

"Someone is going to have to pay to remedy it," Grant Williamson, director at Hamilton Hindin Greene said. "Where the liability lies, I'm not 100 percent sure on that, but obviously the market has reacted."

Weakness from across the Tasman flowed through to the local bourse, with Australia's S&P/ASX 200 Index down 1.5 percent in afternoon trading. The Commonwealth Bank Australia, the country's largest lender, reported its third quarter cash profit of A$2.2 billion was little changed from a year earlier, adding to a negative outlook for Australia's economy after its Reserve Bank knocked rates to a record low 2 percent yesterday.

Dual-listed Westpac Banking Corp fell 0.5 percent to $36.73 while Australia & New Zealand Banking Corp gained 0.8 percent to $36.05.

Shares across the benchmark index fell. Xero, the cloud-based accounting software firm, led the benchmark index lower falling 3 percent to $19.45. Spark, formerly Telecom Corp, declined 0.3 percent to $2.96. MightyRiverPower, the government controlled energy generator and retailer, dropped 1.9 percent to $2.86.

"Australia has certainly helped drag us lower," Williamson said. "That's further reaction to reducing interest rates and also a pretty negative result for CBA bank in Australia that has really hit their index. Investors are being a little bit cautious on the offshore weakness."

NZX fell 0.9 percent to $1.14. The stock market operator reported volume and value of cash trading on New Zealand's share market declined last month, with the total number of trades down 12 percent to 97,392 in April from the same month a year earlier, while the total value dropped 12 percent to $2.6 billion.

Outside the benchmark index, Briscoe Group slipped 1.7 percent to $2.85. The retailer increased first-quarter sales and margins across its homeware and sporting goods retail chains and said profit is tracking ahead of the same period last year in a "highly competitive" market with "relentless promotional activity". Sales rose 4.3 percent to $119.8 million in the first quarter ended April 2.

Delegat Group was unchanged at $4.75. New Zealand's largest listed wine company has agreed to buy an 838-hectare farm in the Hawkes Bay for $29.3 million, extending its footprint in the region and lifting production from 2020.

(BusinessDesk)