Market commentary
WELLINGTON: An unexpected drop in the unemployment rate — showing the economy is rebounding strongly — provided good and bad news for the New Zealand sharemarket which etched out a small gain.
The S&P/NZX 50 Index seesawed in a 150 point range before finishing at 13,091.21, up 46.71 points, or 0.36%, after having been ahead 1% in the morning. The index hit a low of 13,023.09 and a high of 13,169.84 during the day on the back of the latest economic developments.
A total of 86.2 million shares worth $182.91 million were traded, and there were 88 gainers and 50 decliners over the whole market.
The announcement that unemployment had fallen to 4.9% for three months ending December, from 5.3%, set the tone of uncertainty; the market had expected a rise to 5.6%.
The New Zealand dollar strengthened to US72.26c against the American greenback and longterm wholesale interest rates continued to climb. Across the Tasman, the S&P/AX 200 Index was up 1.13% to 6839.20 at 5.45pm (New Zealand time).
Salt Funds Management managing director Matt Goodson said the strong employment numbers provided a mixed bag for the local market as inflationary pressures built in the economy.
‘‘The yield on longterm bonds increased 1213 basis points — a 10year government bond is now 1.25% compared with 0.4% in September — and the expectation of the Reserve Bank cutting the official cash rate is receding,’’ he said.
‘‘Classical cyclical stocks, such as Fletcher Building, will benefit from the earnings of a rebounding economy but the dividendyielding and growth stocks will find it more difficult, having relied on the low interest rates. Mind you, bank deposit rates are still low and investors still have limited alternatives.’’
Fletcher Building gained 15c, or 2.38%, to $6.45, and Fisher & Paykel Healthcare again dominated the trading, rising 56c to $33.70.
Ebos Group increased 60c, or 2.09%, to $29.30; Mainfreight was up 83c to $66.99, Chorus gained 11c to $8.71; Skellerup Holdings picked up 5c to $3.87; and Hallenstein Glasson rose 1.95% to $7.33.
The retirement village operators, under fire from a consumer watchdog group for their purchase arrangements with residents, had positive days: Summerset Group Holdings rose 26c, or 2.16%, to $12.32 and Ryman Healthcare gained 2c to $15.77.
The energy stocks had a volatile day. Contact was down 16c, or 1.9%, to $8.25; Genesis slipped 3c to $3.85; Meridian closed 4c up at $7.14 after falling as low as $6.80 during the day; Trustpower gained 7c to $8.85; and Mercury edged ahead 1c to $7.15.
Mr Goodson said the leading energy stocks were big components of the passive investment funds, and inflows and outflows of funds had to be carried out, so the gentailers’ prices were bouncing around. —