New Zealand sharemarket volatile, swayed by US election

Wednesday, 4 November 2020

The New Zealand sharemarket had a volatile day, dipping and then rebounding late in the afternoon as trader sentiment was swayed by the United States election.

The NZX 50 Index closed up 0.6 per cent on Wednesday, or 69.622 points, at 12,199.93.

”There’s been quite a significant swing in the index during the day,” said Brad Gordon, an investment adviser at Hobson Wealth Partners. “The US election is the dominating force.

“The market had quite a strong open, and was up about 100 points. As voting started in the US it sold off quite heavily and then came back up. It has been quite monumental.

”Early results favoured [Joe] Biden and I think markets were pricing in a Joe Biden win and now it has swung strongly in the last half hour of trading to it looks like a probable [Donald] Trump victory.

Z Energy expects the second half of the year to show improvement.

”Momentum is very strong I think with Trump looking very likely to win this US election.”

Z Energy, New Zealand’s largest fuel retailer, on Wednesday reported a first-half year loss of $58 million from a profit of $28m last year, after it reduced prices to counter a slump in demand for fuel during the Covid-19 lockdown.

However, chief executive Mike Bennetts said that following a capital raise in June, the business has performed above expectations as alert levels have not lasted as long nor been as severe as expected.

“We remain alert to the potential of additional and ongoing Covid-19 outbreaks like that seen in August, but believe we are otherwise well-placed to benefit from the economic recovery in domestic tourism and commercial activity driving volume and market share increases,” Bennetts said.

Z Energy’s market share was increasing and the second half of this financial year would be materially different to the first half, he said.

Z Energy shares rose 1.7 per cent to $2.95

The update showed the company was recovering quite well, said Gordon.

* Z Energy posts $58m first-half loss as Covid-19 dents demand for fuel

* Meridian, Contact shares gain on optimism of Tiwai Point revival

Meanwhile, Pushpay shares fell even though the company said first-half profit doubled.

Pushpay shares fell even though its first-half profit doubled.

The shares, which have doubled this year, fell 8.7 per cent to $8.40.

The company, which operates a digital payment service for churches, said its first-half profit jumped to US$13.4 million (NZ$19.6m), from US$6.5m last year.

However, Gordon said investors were disappointed that Pushpay had not signed up more new churches to its service, which provides the platform for future growth.

“It was a strong result but it was a relatively low quality strong result,” he said.

Separately, the announcement that Peter Huljich would resign as a board director at the end of the year had weighed on the shares, Gordon said.

The Huljich family owns almost 16 per cent of Pushpay’s shares and investors were anticipating that stock may now be sold at a discounted price, creating an “overhang” on the shares, he said.

Carpet maker Cavalier, which is exiting the synthetic market in favour of wool, recorded the biggest gain, up 12 per cent to 33 cents.

Chief executive Paul Alston said first-quarter trading beat expectations, with better-than-expected demand and higher profit margins.

“Woollen carpet revenues have been encouraging, with New Zealand up 23 per cent on a relatively low base and Australia in line with the previous year, despite ongoing Covid-19 restrictions in the state of Victoria and disruptions from port strikes,” Alston said.

“Australian sales are expected to lift as Covid-19 restrictions are eased and product delayed by port disruptions starts to flow normally.”

The company has reduced its debt, and is selling its Auckland property, with funds to be reinvested in the business, he said.