Exporters are expected to deliver stronger results during earnings season, despite a mixed Aussie outlook
New Zealand shares rose, as A2 Milk Co rebounded from Monday’s selling. Auckland International Airport and Steel & Tube Holdings advanced ahead of earnings season.
The S&P/NZX 50 Index rose 14.98 points, or 0.3 per cent, to 5876.91. Within the index, 18 stocks rose, 22 fell and 10 were unchanged. Turnover was $80.9 million.
Investors are cautiously optimistic about the forward outlook for listed exporters ahead of the upcoming earnings season, with companies expected to deliver stronger earnings on the back of a weaker dollar and lower interest rates, despite a slowdown in the dairy sector and a mixed outlook for an Australian economic recovery.
“We should be producing stats off what has been a pretty robust economy, which is slowing down now, but the reporting season should reflect a good solid environment,” said Shane Solly, director at Harbour Asset Management. “Clearly there’s a question mark with people expecting a slowdown in parts of the New Zealand economy, and what that means. Also what’s happening with the Australian economy because a lot of New Zealand companies have substantial exposure to the Australian economy, which is still pretty mixed.”
Auckland International Airport climbed 2.2 per cent to $5.335. Steel & Tube advanced 1.8 per cent to $2.85. Fisher & Paykel Healthcare rose 1.6 per cent to $7.42.
A2 Milk Co rebounded after being the worst performer on Monday to lead the benchmark index higher, up 4 per cent to 78c. On Monday, the company said a bid by cornerstone shareholder Freedom Foods Group and US food and beverage firm Dean Foods wasn’t compelling enough to get a board recommendation.
“We’re seeing a little bit of recovery in A2 Milk,” Solly said. “Clearly the market has had time to absorb comments from the company the other day.”
Investors are weighing the outlook for energy companies, with speculation Contact Energy’s Australian parent, Origin Energy, will announce the sale of its 53 per cent stake sooner rather than later.
Meridian Energy advanced 0.5 per cent to $2.16. Contact was the worst performer on the day, down 2 per cent to $5. Genesis Energy declined 1.1 per cent to $1.76. Mighty River Power slipped 0.4 per cent to $2.84.
“Some of the heat has come out of that sector, for a lot of different reasons. Clearly some of the ‘gentailers’ are facing some structural issues.” Solly said. “There are a number of different scenarios.”
Spark New Zealand rose 1 per cent to $2.935. Fletcher Building fell 0.5 per cent to $8.11.