Sharemarket starts November with a weaker tone

Monday, 1 November 2021

The sharemarket started the month on a subdued note, as most of the major stocks declined amid uncertainty about Covid-19, rising interest rates and weaker consumer confidence.

The benchmark S&P/NZX 50 Index fell 69.513 points, or 0.5 per cent, to 13,030.31 on Monday on light volume.

“We have really struggled to get out of gear today,” said Craigs Investment Partners investment adviser Peter McIntyre. “All the leading stocks are tending to be weaker today which is driving that index down.

“There’s plenty to worry about in our market at the moment.”

* S&P/NZX 50 Index follows Wall Street retreat

* Sharemarket slips as investors eye the prospect of higher interest rates

Investors are concerned about rising interest rates, the impact of Covid-19 and a decline in consumer confidence.

The latest ANZ-Roy Morgan Consumer Confidence survey, published on Friday, showed confidence dropped 7 points from September to 98 points. A score below 100 points indicates consumer pessimism. Fast food retailer Restaurant Brands fell 2.6 per cent to $15.17.

Fisher & Paykel Healthcare, the largest stock on the market, slipped 0.5 per cent to $31.06.

Transport stocks were weaker, with Air New Zealand down 1.5 per cent to $1.645, Auckland Airport down 1.3 per cent to $7.89, and Mainfreight down 2.1 per cent to $88.

Market interest rates have been increasing, weighing on the appeal of yield-sensitive sectors such as utilities and real estate.

“We are an interest rate sensitive market,” McIntyre said. “The way our interest rates, particularly our swap rates, have risen over the last month or so has probably deterred some investors and led to some lightening their positions in the New Zealand market and looking elsewhere.”

Contact Energy fell 1 per cent to $8.10, Meridian Energy fell 1.2 per cent to $4.93, and Spark fell 0.3 per cent to $4.55. Genesis Energy was up 0.5 per cent to $3.275, while Mercury gained 0.6 per cent to $6.16.

Precinct Properties fell 1.2 per cent to $1.65, Argosy Property fell 0.6 per cent to $1.55, Property For Industry fell 0.5 per cent to $2.93, and Stride Property fell 0.8 per cent to $2.36. Goodman Property edged up 0.2 per cent to $2.49.

Westpac, which is dual listed in New Zealand and Australia, shed 6.3 per cent to $25.53 after its annual result showed a key measure of banking profitability had weakened. The bank’s net interest margin, which measures the difference between what banks charge for loans and what they pay out to depositors, fell 10 basis points during the second half, to 1.99 per cent. For the full year, the net interest margin was 4 basis points lower at 2.04 per cent.

AFT Pharmaceuticals was the biggest gainer on the market, up 7.3 per cent to $4.40. The company announced that the United States Food and Drug Administration had confirmed acceptance of the new drug application for its intravenous pain relief medicine Maxigesic IV, which was filed in August.

The date at which the FDA must respond to the application will be notified later this year and is estimated to be between August and September 2022. The US is the world’s largest drug market.

ArborGen, was the second-biggest gainer on the market, up 5.4 per cent to 29.5 cents. The tree seedling company has agreed to sell its New Zealand and Australian assets to a consortium led by Hugh Fletcher for $22.25 million, and said it would use the funds to invest in higher growth markets.