Sharemarket rebounds as investor mood calms over Omicron, interest rates

Tuesday, 30 November 2021

The sharemarket rebounded as investors felt more positive about the impact of the new coronavirus variant Omicron and the outlook for interest rates.

The benchmark S&P/NZX 50 Index jumped 187.249 points, or 1.5 per cent, to 12,718.91 on Tuesday, after dropping 0.8 per cent on Monday.

“It’s having a great day,” said Peter McIntyre, an investment adviser at Craigs Investment Partners. “It’s a completely different scenario to Monday, with overall broad market strength. We are really leading the Asia Pacific market today with a really strong outperformance.”

McIntyre said investors were calmed by United States President Joe Biden’s comments that he wasn't considering a widespread lockdown, and that while the Omicron variant was a cause for concern, it was “not a cause for panic”.

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United States President Joe Biden said he wasn't considering a widespread lockdown, and that while the Omicron coronavirus variant was a cause for concern, it was “not a cause for panic”.

Investors were also feeling more confident that the Reserve Bank would take its time in pushing up interest rates to a more neutral level, he said.

Real estate and utility stocks led the market higher, he said.

Meridian Energy jumped 5.8 per cent to $4.75, Mercury gained 2.9 per cent to $6.02, Contact Energy advanced 0.4 per cent to $7.85, and TrustPower rose 1 per cent to $6.30.

Argosy Property surged 4.6 per cent to $1.48, Precinct Properties advanced 1 per cent to $1.555, Property for Industry rose 2.2 per cent to $2.78, and Goodman Property increased 1.7 per cent to $2.465.

The a2 Milk Company was the largest stock traded by volume and value after it was removed from the MSCI Global stock index, prompting investors who track the index to sell their holdings. Almost 69 million shares changed hands and the stock slipped 1.5 per cent to $6.11.

New Zealand Refining fell 1.1 per cent to 87 cents after completing a $39 million share placement at 83 cents a share. The company will use the money to fund private storage services as it moves out of the refinery business to become an import-only terminal. It plans to raise an additional $5m through a share buyback.

Medicinal cannabis company Cannasouth fell 1.3 per cent to $3.75 after agreeing to acquire the remaining stake in its cultivation joint venture business, which it said was a significant milestone in its strategy to become a fully integrated seed to sale medicinal cannabis business.

Rua Bioscience rose 2.6 per cent to 40 cents after agreeing to buy Zalm Therapeutics, a New Zealand-based medicinal cannabis company, which has Australia’s leading listed medicinal cannabis company, Cann Group, as one of its key shareholders and partners. Rua will pay for the acquisition by issuing $10m of new shares at about 41c each.

New Zealand Herald publisher NZME rose 6.8 per cent to $1.41 after agreeing to buy business news website BusinessDesk in a deal worth up to $5m.

Elsewhere in Asia, shares were mixed as investors continued to cautiously weigh how much damage the new Omicron variant may unleash on the global economy.

On Wall Street, the S&P 500 rose 1.3 per cent on Monday, recovering more than half of its drop from Friday, which was its worst since February. Bond yields and crude oil also recovered chunks of what they lost in traders' knee-jerk reaction to run toward safety and away from risky investments.

- With AP