Shares drift lower amid US-China jitters
A2 Milk leads index down as Reserve Bank move looms
New Zealand shares followed overseas markets lower amid trade tensions between the US and China and as investors await another local interest rate cut this week.
The S&P/NZX 50 Index fell 97.84 points, or 0.9 per cent, to 10,766.03. Within the index, 28 stocks fell, 13 rose and nine were unchanged. Turnover was reasonable at almost $111 million, with defensive utility and property
stocks dominating those trading on more than a million shares.
Peter McIntyre, an investment adviser at Craigs Investment Partners, said all the Asian markets were weaker yesterday.
As well as US President Donald Trump’s threat of increased tariffs against China, investors are also concerned at the potential for a snap election in the UK. Strikes and unrest in Hong Kong indicate ongoing tensions within China, he said.
“We are being led from the US. Investors are getting nervous and turnover is still relatively low,” he added.
The S&P/ASX 200 was down 1.8 per cent in early afternoon trading. The Topix was down 2.1 per cent, the Hang Seng was down 2.9 per cent and
the Straits Times Index was down 1.9 per cent.
Synlait Milk and a2 Milk led the market lower yesterday, down 3.7 per cent and 3.3 per cent respectively to $9.65 and $17.05.
China is a key market for a2 and New Zealand’s entire dairy industry. Synlait is a key supplier to a2. Treasury today said in a monthly update that New Zealand’s dairy sector should consider diversifying into other international markets to reduce its reliance on China.
Year to date, a2 is up 58 per cent. The leading gainers yesterday were Auckland International Airport, up 2.1 per cent at $9.55.
Heartland Group rose 1.9 per cent to $1.61. Goodman Property was the heaviest traded stock with 2.5 million shares changing hands. It was up 0.7 per cent at $2.09.
McIntyre noted an expected interest rate cut would support the market in the latter half of the week. The Reserve Bank of New Zealand’s next monetary policy statement is expected tomorrow. If the bank cuts as expected, those property firms would potentially go higher, he said. Among stocks trading on more than a million shares, Kiwi Property rose 0.3 per cent to $1.62, Precinct Properties NZ rose 0.3 per cent to $1.785, and Arvida Group rose 0.7 per cent to $1.37. Meridian Energy fell
1.1 per cent to $4.77 and Spark New
Zealand rose 0.1 per cent to $1.77. McIntyre noted little news on the mainboard, apart from Briscoes Group which posted a lift in first-half sales. The retailer noted net profit would be hit by a $1.2 million adjustment as a result of the way leases are treated in new accounting standards.
Shares in Briscoes rose 3.5 per cent to $3.55.