Market commentaries
WELLINGTON: New Zealand shares rose as investors weighed up the prospect of a potential rate cut, spurring demand for stocks with high dividends, in a world economy that remains relatively robust. Sky Network Television, Spark New Zealand and Chorus gained.
The S&P/NZX 50 index gained 34.86 points, or 0.4%, to 9292.15. Within the index, 32 stocks gained, 14 fell and four were unchanged. Turnover was $124.4 million.
Traders are pricing in a 50% chance New Zealand’s Reserve Bank will cut the official cash rate in an effort to lift inflation. Low interest rates have been a longstanding support for the domestic market, where investors can find relatively stable returns from the likes of utilities and property investment firms. Earnings season affirmed the relatively benign outlook for local companies, while the global economy remains well supported by rapid growth in the United States, notwithstanding geopolitical ructions.
‘‘We’ve got potential for a rate cut’’ with the global economy in ‘‘pretty reasonable shape’’ which is ‘‘buoying the market,’’ Grant Davies, an investment adviser at Hamilton Hindin Greene, in Christchurch, said.
‘‘We find ourselves in this situation where people are expecting the worst is about to happen because it’s been so long since things have gone wrong.’’
Sky TV led the market higher, rising 3.6% to $2.28, as it bounced back for a second day after a 19% decline through the tailend of August.
Spark rose 1.8% to $4.01 after Vodafone New Zealand reported a decline in annual earnings as its margins were squeezed by an increasingly competitive broadband market. Network operator Chorus, which counts both Spark and Vodafone as major customers, rose 1.6% to $4.72.
Mercury NZ rose 1.5% after its joint venture with Infratil was granted approval by Australia’s Foreign Investment Review Board to buy Tilt Renewables. Infratil increased 0.3% to $3.425. Tilt’s independent directors urged investors to reject the $2.30 takeover, saying the price was too low. Tilt shares increased 0.9% to $2.30.
Mr Davies said Infratil and Mercury already owned about 77% and did not need much to trigger compulsory acquisition under the Takeovers Code.
Contact Energy rose 0.5% to $5.58 after appointing Westfield Milk Products’ Dorian Devers as its new chief financial officer.
Kathmandu Holdings fell 1.5% to $3.20, the biggest fall on the day. The retailer is scheduled to report annual earnings on September 18. Westpac Banking Group fell 0.9% to $30.82 after saying it reached a $A35 million deal with the Australian Securities and Investments Commission, settling potential litigation over automatically approving 10,500 loans between 2011 and 2015 that should have been referred to a credit officer. Australia & New Zealand Banking Group declined 1.3% to $31.38.
Outside the benchmark index, Methven gained 6.3% to $$1.18. The tapware maker attracted a new investor who paid $1.20 a share for a 6.4% stake.
Pyne Gould Corp fell 1.5% to 34c after appointing Grant Thornton Guernsey as its new auditor to meet Guernsey law. Grant Thornton NZ will provide a separate audit to ensure the firm meets New Zealand laws and NZX listing rules.
Australian shares closed lower, as reports of fresh investigations into financial institutions kept investors on edge, while overall sentiment was cautious before key economic data releases.
The benchmark S&P/ASX200 index ended 23.8 points, or 0.38% lower, at 6287.1 points, while the broader All Ordinaries index was down 22.4 points, or 0.35%, at 6394.1 points.
Financial stocks came under pressure on indications the country’s superannuation regulator is opening up fresh investigations into the sector, following revelations of widespread wrongdoing in the banking royal commission inquiry.
Earlier in the day, the Australian Securities and Investments Commission said Westpac had agreed to pay a $35 million fine after admitting to wrongly assessing people’s ability to repay mortgages.
Initial findings by the royal commission are expected to be submitted to the government by the end of September.
Markets barely budged on the widelyexpected decision by the Reserve Bank to keep its key interest rate at 1.5%, and a change seems no nearer, even as commercial banks nudge up their home loan rates to protect profit margins.
Energy stocks were the biggest drag. Whitehaven Coal slid 7.6%, partly on account of the stock trading exdividend.
Healthcare and materials shares, however, ended higher, helped by gains in BHP Billiton, Fortescue Metals, Cochlear and CSL.
Investors will be awaiting details of Australia’s national accounts today. Economists are tipping GDP to have grown 0.7% in the June quarter, which would mean the economy expanded 2.8% on an annual basis.