Market commentary
AUCKLAND: Strong halfyear results from leading stocks Fletcher Building and Ebos Group provided a boost to the New Zealand sharemarket, but its latest gain was hindered by a further rise in longterm wholesale interest rates.
The S&P/NZX 50 Index rose 63.25 points, or 0.5% to 12,673.97, spurred by further buying in Contact Energy and Meridian.
There were 80 gainers and 67 decliners over the whole market on solid volume of 67.6 million share transactions worth $207.62 million.
Managing director of Salt Funds Management, Matt Goodson said there were very solid results from Fletcher Building and Ebos as expected, but the latest lift in bond yields would impact on the interest ratesensitive stocks.
‘‘There was also an interesting lead from the Australian ASX, which had a negative reaction to good results over there and was down nearly half a percent [at 5.45pm NZ time],’’ he said.
The US 10year Treasury yield climbed 9.9 basis points to a oneyear high of 1.298%, the biggest oneday rise since November. The New Zealand 10year government bond yield has risen from 0.5% in September to the present 1.53%.
Fletcher Building, with its residential division performing well, rose 5c to $6.50 after showing its business was in much better shape. The country's biggest construction company reported a 1% increase in revenue to $3.98 billion, a 47% rise in operating earnings (ebit) to $323 million and a 48% climb in net profit to $121 million for the six months ending December.
Fletcher is paying an interim dividend of 12c a share on March 24, and is delivering $150 millionplus annual gross cost reductions in the 2021 financial year.
Ebos Group closed down 6c to $29.11 after touching $30 earlier in the day, following another record halfyear result. Revenue increased 6.3% to $4.65 billion, net profit rose 13.7% to $92.9 million, and Ebos is paying an interim dividend 42.5c a share, an increase of 13.3% on March 18.
Mr Goodson said there appeared to be further buying in Contact Energy and Meridian by the offshore clean energy passive funds. Contact increased 26c to $7.31 on trade worth $20.5 million, and Meridian climbed 32c to $6.15 on trade worth $917.5 million.
Mercury was down 3c to $6.60, while Tilt Renewables was up 27c to $6.6.60, and Trustpower gained 10c to $8.70.
Among the blue chips, Fisher and Paykel Healthcare fell 15c to $32.25, Chorus decreased 10c to $8.27 and Freightways declined 17c to $10.86, while a2 Milk was up 21c to $10.98, Ryman Healthcare climbed 38c to $15.80, and Summerset Group Holdings gained 9c to $13.02.
NZX gained 1c to $2 after reporting a 12.8% rise in revenue to $78.42 million, a 9.7% increase in operating earnings to $34.4 million, and a 20% climb in net profit to $17.58 for the year ending December. The NZX experienced record trading levels with a 41.8% rise in value traded to $53.7 billion, and is paying a dividend of 3.1c a share on March 26.
Duallisted Westpac Banking Corporation rose $1.31 to $25.52 in improved December quarterly profit of $A1.7 billion ($NZ1.83 billion) and a writedown of $A501 million in previously recorded impairments. —