Fonterra’s milk price cut buoys shareholders’ fund, but not processors.
New Zealand’s S&P/NZX 50 index joined a global slide as heightened fears about the pace of investment in artificial intelligence infrastructure continue to weigh on tech stocks, with Infratil a drag on the benchmark
The a2 Milk Co led the NZX50 lower, joining Synlait Milk and Fonterra Cooperative Group's farmer-owned shares in declining today after Fonterra trimmed its forecast farmgate payout after the ninth straight slide in dairy prices at the Global Dairy Trade auction.
Still, Statistics New Zealand figures showed the local economy grew at a faster pace than expected in the September quarter, and from a higher base, buoying the likes of Freightways and Fletcher Building, which are exposed to domestic activity.
And local miners including Santana Minerals and Minerals Exploration were on the red side of the ledger as gold futures came off through the day, while Toronto-listed OceanaGold Corp got fast-track consent for its gold mine in Waihi.
The NZX50 fell 39.14 points, or 0.3%, to 13,256.77, with 22 stocks declining, 19 gaining and nine unchanged. Turnover was $161.3 million across the main board, with Auckland International Airport accounted for almost $22 million as it ended the day unchanged at $8.13.
New Zealand joined Asia in following Wall Street’s soft lead, where software giant Oracle’s debt-funded AI infrastructure spend has become a posterchild for scepticism about the sector generating big enough returns to justify the spending. Australia’s S&P/ASX 200 index was down 0.2% in late trading, while Japan’s Nikkei 225 fell 1.2% and Hong Kong’s Hang Seng dipped 0.4%.
Infratil, which counts CDC Data Centres as its biggest investment, was the major drag on the local bourse, falling 1.8% to $10.70, while local tech companies were also among the decliners as Gentrack fell 1.2% to $8.45 and Vista Group International shrank 1.2% to $2.55. Fisher & Paykel Healthcare slipped 0.9% to $36.91. Serko was unchanged at $3.
The a2 Milk Co led the benchmark index lower, falling 2.2% to $10.20 after Fonterra cut 50 cents from its forecast farmgate milk price to a range of $8.50-to-$9 per kilogram of milk solids. Fonterra shares slipped 0.2% to $5.94, while the Shareholders’ Fund units – which are tied to the cooperative’s earnings and reflect the farmgate price as an input cost – rose 1.5% to $8.344.
Outside the index, Synlait Milk fell 3.1% to 62 cents.
Companies exposed to the domestic economy were among gainers on the day after Stats NZ figures showed gross domestic product grew 1.1% in the September quarter, more than twice the Reserve Bank’s forecast for 0.4%. The central bank jawboned down wholesale interest rates earlier this week after lenders started raising mortgage rates as bond traders trimmed the bets on the official cash rate being cut further.
The kiwi dollar fell to 57.57 US cents at 5pm in Auckland from 57.85 cents yesterday, while two-year swaps were down 4 basis points at 2.98%.
ASB Bank economist Wesley Tanuvasa said goods production drove most of the growth, with business services and government-funded areas also stronger than anticipated.
“While the next OCR move is more likely to be up rather than down, the OCR remains conditional on the economic and inflation outlook,” Tanuvasa said in a note. “Although growth is welcome, the economic hole remains big, and stimulatory policy settings are required to climb out.”
Trans-Tasman building materials firm Vulcan Steel posted the biggest gain on the NZX50, up 3.2% at $8.50, while rubber goods maker Skellerup Holdings advanced 2.3% to $5.27 and Fletcher Building rose 1.1% to $3.65.
Courier operator Freightways, which yesterday announced the A$71 million acquisition of Victoria’s VT Express, increased 0.6% to $14.20.
Precinct Properties NZ was the most heavily traded stock with a volume of 4.8 million as it slipped 0.4% to $1.175.
Outside the benchmark index, NZ Rural Land Co fell 1.5% to $1.015 after saying it’s received KPMG’s draft report on strategic options for its capital structure and will provide feedback to the consultancy early next year before releasing a public summary on the final report.
Solution Dynamics was unchanged at 63 cents after saying chief executive Pat Brand will step down at the end of the month due to ongoing family medical issues. Chief financial officer Susie Watts will act as CEO from next year.
Mining companies were generally weaker as gold prices shed some of their gains overnight, with futures prices down 0.2% at US$4,363 an ounce, while Toronto-listed OceanaGold – which left the NZX almost a decade ago – secured fast-track consent for its mine in Waihi.
Santana Minerals fell 1.1% to 93.5 cents, while Minerals Exploration dipped 3% to 16 cents and New Talisman Gold Mines decreased 3.6%, or 0.1 of a cent, to 2.7 cents.
Manuka Resources, the parent of Trans-Transman Resources, was unchanged at 8 cents.
Reporting by Paul McBeth.
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