Pacific Edge’s cash position had a few investors wary.
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New Zealand’s S&P/NZX 50 index dipped ahead of the Reserve Bank’s policy review on Wednesday, when the central bank is expected to deliver another rate cut to help maintain the burgeoning signs of momentum in the domestic economy.
Index heavyweight Fisher & Paykel Healthcare was one of the major drags on the benchmark, dipping ahead of its first-half result on Wednesday in what’s expected to be a strong earnings report.
Meanwhile, minnow cancer diagnostic firm Pacific Edge dropped to a two-month low as some investors were unnerved by the accelerating cash burn, which may need another capital injection while it continues to press for US Medicare coverage.
And Fonterra Shareholders’ Fund units fell for a seventh session after the dairy exporter trimmed the top end of its forecast farmgate milk price, and increased global supply continues to eat away at pricing.
The NZX50 decreased 19.42 points, or 0.1%, to 13,480.43, with 27 stocks declining, 20 gaining, and three unchanged. Turnover was $129.2 million, of which Fisher & Paykel Healthcare accounted for $24.7 million as it fell 1.6% to $36.70.
The country’s biggest listed company was one of the larger drags on the domestic bourse ahead of its first-half result on Wednesday, with some analysts picking the weak New Zealand dollar may open the door to an upgrade.
The kiwi dollar traded at 56.03 US cents at 5pm in Auckland from 56.07 cents yesterday, and was at 48.65 euro cents from 48.69 cents.
The F&P Healthcare earnings is part of a double-act on Wednesday, with the Reserve Bank also due to announce its latest monetary policy statement, which economists predict will see a quarter-point cut to the official cash rate, taking it to 2.25%, and the forecast track leaving open a chance for a further reduction next year.
The tenor of the latest corporate earnings season has been more positive, with a growing number of company executives saying they’re seeing tentative signs of improvement in the economy.
“The RBNZ needs to provide additional stimulus to cement the recovery and to maintain optionality,” ASB Bank senior economist Mark Smith said in a note. “Despite improving risk appetite, the NZ dollar has been under pressure leading to Wednesday’s MPS.”
New Zealand’s NZX50 joined Australia and Singapore on the softer side during the Asian trading session, as the major banks weighed on the S&P/ASX 200 index, which was down 0.2% in late trading, while Singapore’s Straits Times Index declined 0.4%. Japan’s Nikkei 225 nudged up 0.1% and Hong Kong’s Hang Seng was up 0.6%.
Fishing group Sanford snapped a six-day run higher to lead the NZX50 lower, falling 2.4% to $7.31, giving up some recent gains after reporting another record first-half result last week.
Among others at the bottom of the leaderboard, Fletcher Building declined 2.4% to $3.7 and Goodman Property Trust fell 2% to $1.99.
Fonterra Shareholders’ Fund units slipped 0.5% to $7.72 after the dairy exporter chopped the top off its forecast farmgate milk price range to $9-to-$10 per kilogram of milk solids, having previously projected a range of $9-to-$11/kgMS. Fonterra also increased forecast production by 20 million kgMS to 1.55 billion kgMS.
Contact Energy decreased 0.1% to $9.71 after the power company outlined its new five-year plan to boost annual earnings by another $300 million by 2031.
KMD Brands posted the biggest gain on the day, up 5.6% at 28.5 cents, while Gentrack gained 3.6% to $9.61 as investors preferred the target price upgrade by Bell Potter analysts over the small trimming by the UBS team.
Investore Property rose 2.9%, or 3.5 cents, to $1.24, even as it shed rights to a 1.625 cents per share dividend.
Meanwhile, Infratil was one of the bigger tailwinds for the benchmark index as it gained 1.9% to $11.78 ahead of shedding rights to its 7.25 cent dividend on Wednesday.
Spark New Zealand was the most heavily traded stock on the day with a volume of 2.4 million shares as it rose 0.9% to $2.26.
Trading was more muted after yesterday’s MSCI reweightings, while next week’s S&P/NZX quarter review isn’t expected to see any new entrants or exits in the major indices.
Outside the benchmark index, Pacific Edge fell 8.3% to 16.6 cents after the cancer diagnostics firm reported a wider first-half loss and increased cash burn as its push to get US Medicare coverage takes longer than anticipated. The company said it’s considering options, which will need either capital initiatives or reducing the cash burn.
Reporting by Paul McBeth.
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