Power companies short-circuit rebounding trend

Weakness in the big power companies helped drive the sharemarket lower, while investors took to the sidelines in the lead-up to the release of key US labour data for September.

The S&P/NZX50 index ended down 22.07 points, or 0.2 per cent, well off its low for the day, but failing to build on Thursday’s 74-point rally.

Turnover was $65.4 million and there were 58 gains and 68 falls on the main board.

Harbour Asset Management portfolio manager Shane Solly said the market over the week had been on the receiving end of “choppy” US data, which made for volatile trading.

“Some data supports an ‘on hold’ stance from the Fed, while others have backed the case for rate hikes,” he said. “For the markets, it’s very much the old adage: ‘No fun until the Fed is done’.

“Until central bank rates have peaked, the capital markets are going to be choppy, and people have been quite wary,” he said.

The Fed’s next decision is due in early November.

Among the power companies, Contact Energy fell 9 cents to $7.98 — a five-month low — while Meridian dropped 6.5c to $5.17.

Contact has had a run of bad news in recent weeks. First, it announced that one of its fast-start gas peakers would be out of action for about 18 months.

Contact then said the start-up of its Tauhara geothermal plant had been delayed by three months to the March 2024 quarter due to commissioning issues.

In addition, Solly said the power sector had been under pressure.

“There is a bit of speculation out there as to whether wholesale prices will hold as well as they have, given the increase in electricity generation that is coming online and as we face the possibility of lower demand resulting from a softening economy,” Solly said.

Some retirement village stocks were also weak.

Market leader Ryman fell by 5c to $6.04, while Summerset lost 4c to $9.71, despite Auckland’s house prices showing signs of recovery after a one-and-a-half-year slump.

The CoreLogic house price index published this week showed an 0.4 per cent increase in Auckland property values in September — the first growth since March 2022.

Port of Tauranga dropped by 3c to $5.79 while steel distributor

Vulcan recovered from early weakness to end steady at $8.25. Retailer

Briscoe Group fell 6c to $4.51. On the plus side, Skellerup gained 5c to $4.80 and kiwifruit company gained 11c to $2.51.