US-China tension makes itself felt in NZ

New Zealand shares fell as the prospect of heightened tensions between the US and China weighed on the global economic outlook and prospects for corporate earnings.

The S&P/NZX 50 index declined 57.15 points, or 0.5 per cent, to 11,636.26. Within the index, 29 stocks fell, 13 rose and eight were unchanged. Turnover was a light $90.1 million.

Stock markets across Asia fell after Beijing said it would retaliate against a US order that China close its consulate in Houston, Texas, raising fears that a trade deal between the world’s two biggest economies could be spiked. China’s foreign ministry ordered the US to close its consulate in Chengdu.

A weak lead from Wall Street added to the negative tone, with an unexpected increase in new jobless claims and mixed company earnings triggering a widespread sell-off.

Michael McCarthy, a market strategist at CMC Markets, said the weak data prompted investors to buy “haven” assets such as gold, which was trading at an 11-year high at almost US$1885 an ounce.

On the local benchmark, a2 Milk Company fell 1.5 per cent to $20.84. The company is highly dependent on the Chinese market and has been a key driver of the NZX 50’s recovery over the past four months. The stock is still up 0.5 per cent this week despite today’s decline.

Kiwi Property Group led the market lower, falling 3.7 per cent to $1.03, as it dropped with most of the property sector.

Goodman Property Trust fell 1.8 per cent to $2.18, Vital Healthcare Property Trust declined 1.7 per cent to $2.615 and

Precinct Properties dropped 1.5 per cent to $1.695. Argosy Property bucked the trend, rising 1.2 per cent to $1.285.

Chorus rose 2.1 per cent to $7.40, posting the day’s biggest gain, as it recovered from Thursday’s decline on the Commerce Commission’s review of its regulatory position.

Oceania Healthcare rose 2 per cent to $1.01, also rallying from Thursday when it reported weak earnings. Yesterday’s comeback may have been helped by a note from Jarden analysts who described the earnings as a “solid operating result in a challenging environment” and lifted its target price on the stock by 8c to $1.08.

Air New Zealand was down 0.4 per cent to $1.325. It said it was ramping up its domestic schedule for August to 70 per cent of preCovid levels. The airline had planned to operate at about 55 per cent of its usual capacity during August.

Auckland International Airport rose 0.5 per cent at $6.34.

Z Energy rose 0.3 per cent to $2.95, extending a rally which has seen it gain 6.6 per cent this week, after saying it was growing market share, while Trustpower fell 0.2 per cent to $6.82.