F&P Healthcare tumbles as softer Cochlear sales add to healthcare chill.
New Zealand’s S&P/NZX 50 index sank to a four-month low in its steepest one-day slide since April last year as skinny margins for US network equipment maker Cisco Systems and Algorhythm Holdings’ claim to drive trucking efficiencies through its artificial intelligence technology kept markets on edge around the world.
Fisher & Paykel Healthcare and Ebos Group were among the bigger drags on a sombre day on the local market, as a soft earnings report from Australia’s Cochlear was the latest bad news weighing on healthcare stocks on both sides of the Tasman.
Skellerup Holdings was one of the few bright spots on the local market after the rubber goods maker’s record first-half result earlier this week, while outside the top 50 index, South Port New Zealand rallied on its own record earnings.
Meanwhile, inflation expectations nudged higher in the Reserve Bank’s latest survey of business managers, reflecting the growing price pressures in the economy, ahead of the central bank’s first interest rate review next week.
The NZX50 tumbled 333.3 points, or 2.5%, to 13,198.18, taking its weekly decline to 1.8%. Within the index, 43 stocks fell, four gained, and three were unchanged. Turnover across the main board was $171.4 million, of which Fisher & Paykel Healthcare accounted for $46.4 million as it sank 7.1% to $36.61, its lowest level since November.
Ebos Group fell 3.5% to $24, joining the medical device maker as one of the bigger weights on the local index, with healthcare stocks on both sides of the Tasman ailing after Cochlear’s declining first-half sales were the latest soft result in the sector, following disappointing earnings from CSL and Pro Medicus.
“Fisher & Paykel is a major part of the index and it’s been sold off quite aggressively,” said Peter McIntyre, an investment adviser at Craigs Investment Partners.
New Zealand’s market was one of the hardest hit across Asia, following the weak lead in the US where the Nasdaq Composite tumbled 2% after a disappointing December quarter for Cisco Systems revived fears about the burgeoning AI sector’s impact on software companies, while trucking and logistics firms were shaken by Algorhythm Holdings claiming to have AI technology able to increase trucking efficiencies.
Mainfreight declined 2.2% to $62, while Freightways fell 2.5% to $14.52.
Australia’s S&P/ASX 200 index was down 1.4% in late trading, while Japan’s Nikkei 225 dropped 0.8% and Hong Kong’s Hang Seng slid 1.8%.
“We’ve historically been recognised as a defensive play, but that’s gone straight through the bat and into the wickets today,” Craigs’ McIntyre said.
Serko led the benchmark index lower, sinking 7.2% to $2.20 and taking its weekly decline to 16%, with the travel software firm feeling the brunt of the sour tech sentiment on the local bourse. Gentrack fell 5.8% to $6.78, pushing it down 3.1% on the week, while Vista Group International dropped 3.2% to $1.80, taking its weekly decline to 0.6%.
Westpac Banking Corp fell 2.6% to $47.60 after the dual-listed lender reported a 6% increase in December quarter profit, albeit on skinnier core net interest margins.
Skellerup posted the biggest gain on the NZX50, up 1.9% at $5.78, as investors continued to be impressed by its record first-half result earlier this week. Property for Industry rose 0.9% to $2.28, while ANZ Group Holdings increased 0.7% to $47.90 and Oceania Healthcare advanced 0.6% to 81.5 cents.
Outside the benchmark index, South Port New Zealand gained 3.4% to $9.20 after the southern-most maritime hub lifted first-half profit 47% to a record, benefiting from the activity in the regional economy.
The kiwi dollar was little changed through the day, trading at 60.32 US cents at 5pm in Auckland, down from 60.56 cents yesterday.
The Reserve Bank’s quarterly survey of expectations showed business managers anticipate a slightly faster pace of inflation to emerge in the coming year, albeit still in the central bank’s 1%-to-3% target band ahead of next week’s policy review.
Satish Ranchhod, a senior economist at Westpac NZ, said inflation expectations have been drifting higher over the past year, and are noticeably higher than the 2% midpoint of the target band.
“While inflation expectations at these levels aren’t a game changer for the RBNZ, they add to a picture of a less-benign inflation environment than had been anticipated,” Ranchhod said in a note.
Separately, the BNZ-BusinessNZ performance of manufacturing index showed activity continued to grow in January, while Statistics New Zealand’s tourism and migration figures indicated a pick-up in net migration and an increasing number of foreign visitors.
Reporting by Paul McBeth.
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