NZ sharemarket ends the week flat, down 0.1% – Market close

Jeremy Sullivan, investment adviser with Craig’s Investment Partners, said the theme for the week had been higher bond yields and oil prices, and the markets had been quite resilient.

“Yields north of 5% are normally a headwind for markets as they create a higher hurdle for stock valuations. Companies need to have earnings expectations in excess to justify their premiums.

“The NZ dollar has fallen 5% this month (against the American greenback), and this is related to the higher yields,” Sullivan said.

The NZ dollar was trading at a 10-month low of US56.53c, after reaching 56.58c in November.

The US 10 Year Treasury Note yield, the benchmark for mortgages and corporate borrowing, increased to 5.186% and the 30 Year yield reached 5.479%. Both yields are at 20-year highs.

The 10 Year New Zealand Government Bond yield has also increased to 5.12%.

On Wall Street, the Dow Jones Industrial Average fell 0.31% to 51,349.98 points, its lowest level since mid-June, while the S&P 500 and Nasdaq Composite were flat.

Brent Crude oil climbed to US$105.80 (NZ$186.91) a barrel as reports of Houthi attacks and uncertainty around Middle East shipping routes competed with news that the US and Iran were discussing a phased deal to restore commercial transit through the Hormuz Strait.

Local stocks

At home, Infratil fell 30c, or 2.05%, to $14.30; Meridian Energy fell 10c, or 1.80%, to $5.46; Spark fell 5c, or 2.53%, to $1.93; and CDL Investments fell 4.5c, or 7.32%, to 57c.

Scott Technology fell 7c or 2.56% to $2.66; Delegat Group fell 18c or 4.06% to $4.25; and Blackpearl Group fell a further 1c or 3.85% to 25c.

Auckland International Airport was up 15c or 1.79% to $8.55; Vulcan Steel rose 29c or 4.32% to $7; Steel & Tube gained 1.5c or 5.17% to 30.5c; and Winton Land rebounded 3c or 2.80% to $1.10.

Serko increased 5c or 3.91% to $1.33; Sanford added 19c or 2.90% to $6.75; Scales Corp gained 15c or 2.27% to $6.77; NZME was up 2c or 1.92% to $1.06; and Burger Fuel increased 2c or 6.06% to 35c.

Fonterra Co-operative gained 10c or 2.05% to $4.98, and Fonterra Shareholders’ Fund was up 12c to $8.40 following the dairy giant’s strong annual result.

In the retail sector, Hallenstein Glasson was up 15c to $13.25; Briscoe was down 8c, or 1.77%, to $ 4.45; and Michael Hill fell 1c, or 2.33%, to 42c.

Heartland Group was up 2.5c, or 1.98%, to $1.28 after the Reserve Bank of NZ issued a notice to TSB Bank for an independent review of its prudential compliance. Deloitte NZ will produce a report in November.

Heartland will still hold a special shareholders meeting next week to vote on purchasing all TSB shares and then merging the two banks.

“The opportunity to create a New Zealand challenger bank of scale by combining Heartland Bank’s specialist expertise with TSB’s everyday banking capabilities remains compelling,” Heartland said.

Campbell Wilson, former chief executive of Air India, and Rob McDonald, a former Air NZ chief financial officer, have been elected to the national airline’s board. Air NZ was up 0.005c to 40.5c.

Used car dealer 2 Cheap Cars, unchanged at 87.5c, told shareholders at its annual meeting that it sold 3010 vehicles, down 2% for the five months ending August, and revenue rose 5% to $35.1m.

Gross margin improved to 25% from 19%, and net profit was $2.3m compared with $800,000 in the same five-month period last year. Economic volatility remained a key theme in full-year 20217, 2 Cheap Cars said.

Accordant Group, unchanged at 18c, announced that its chief executive, Jason Cherrington, will retire towards the end of the 2027 financial year ending March and will focus on his director role.