NZ shares mixed: NZD Slips

New Zealand Stock Markets

New Zealand shares were mixed, with Kathmandu Holdings up and Sky Network Television continuing to bounce while Chorus and Comvita fell. 

The S&P/NZX50 Index rose 15.04 points, or 0.2 percent, to 8,492.12. Within the index, 27 stocks fell, 17 rose and six were unchanged. Turnover was $92.6 million.

Nearly $350 million was traded through the local benchmark index on Friday, as both the local benchmark index and the S&P/ASX indices were rebalanced.

Kathmandu Holdings led the gains today, up 1.7 percent to $2.40, while Summerset Group Holdings advanced 1.6 percent to $6.91.

Sky Network Television gained 1.3 percent to $2.32.

Chorus was the worst performer, down 5.6 percent, or 23 cents, to $3.91, after shedding rights to a 9 cent interim dividend.

Today, Spark New Zealand launched a pilot programme for fifth-generation mobile technology framework, known as 5G, in Wellington.

The pilot will run for a month, giving Spark information to further refine how to build a 5G network in a real environment, and it will set up a 5G lab later this year to use the data to help build businesses and applications based on the new technology.

Comvita dropped 2.6 percent to $7.60 and Mercury New Zealand fell 2 percent to $3.215.

Outside the benchmark index, NPT was unchanged at 59 cents while Augusta Capital gained 1 percent to $1.05. NPT shareholders voted in favour of Augusta buying the real estate investor's management contract for $4.5 million at a special meeting today in Auckland.

Of the votes cast, 97 percent were in favour of the resolution to approve the externalisation proposal. The transaction was conditional on achieving a minimum of 50 percent of votes cast.

Veritas Investments was unchanged at 4 cents. It has cut its 2018 guidance after shareholders voted to sell the business and assets of the Mad Butcher franchisor to its chief executive Michael Morton.

The New Zealand dollar slipped and is poised to go lower with the focus firmly on this week's policy reviews at the US Federal Reserve and New Zealand's central bank, where the Fed is expected to hike while the Reserve Bank stays on hold.

The kiwi dollar traded at 72.10 US cents as at 5pm in Wellington from 72.19 cents as at 8am and 72.15 cents in New York on Friday. The trade-weighted index was at 74.27 from 74.28.

NZ shares mixed; NZD little changed

New Zealand Stock Markets

New Zealand shares were mixed, with Fletcher Building and Sky Network Televisionreboudning after recent selling and companies including Spark New Zealand and Ebos Group shedding their rights to dividends.

The S&P/NZX 50 Index gained 34.7 points, or 0.4 percent, to 8,467.33. Within the index, 23 stocks
fell, 21 rose and six were unchanged. Turnover was $149.8 million.

Fletcher Building and Sky Network Television, which gained today, are being seen as value plays by some investors due to recent falls, McIntyre said. Sky, which rose 1.9 percent to $2.15, has dropped 40 percent in the past year, while Fletcher gained 1.8 percent to $6.41 today, having fallen 30 percent in the past year.

The worst performing stocks today were led by those giving up dividend rights. Spark New Zealand, which dropped 12.5 cents or 3.5 percent to $3.41, gave up an 11 cent interim dividend and 1.5 cent special dividend. Freightways dropped 8 cents or 1.1 percent to $7.53, after shedding a 14.5 cent dividend.

NZX dropped 2.7 percent to $1.07, while Metro Performance Glass fell 2.5 percent to 77 cents.
Ebos Group declined 25 cents or 1.4 percent to $18.19, having shed a 33 cent dividend. It has hired Telstra executive Shaun Hughes as chief financial officer after the health-care and pet-care products group promoted John Cullity to chief executive.

Outside the benchmark index, PGG Wrightson was unchanged at 62 cents, though it gave up rights to a 1.75 cent dividend. The firm said it is "open to options" after it hired investment bankers for a strategic review of the business and Australian media reported that it is preparing non-disclosure agreements with interested parties.

The rural services firm is indirectly controlled by China's Agria Corp, which owns a 50.2 percent stake via Agria (Singapore). The Australian Financial review named ASX-listed Ruralco Holdings and Elders, Agrium-owned agribusiness Landmark, and Champ Private Equity as potential suitors, while Hong Kong-listed CK Life Sciences is said to be interested in Wrightson's seeds business.
The New Zealand dollar was little changed, benefiting from ongoing US dollar weakness despite initially falling on weaker-than-expected domestic economic growth.

The kiwi dollar traded at 73.27 US cents as at 5pm in Wellington, unchanged from 8am and versus 73.39 cents late yesterday.  The trade-weighted index slipped to 74.95 from 75.07 yesterday.

The kiwi fell around a quarter of  US cent early in the session on news that the economy expanded 0.6 percent in the three months to Dec. 31 versus an expected 0.8 percent as unfavourable weather weighed on agricultural output.

NZ dollar holds onto tight range ahead of US CPI data

New Zealand Stock Markets

The New Zealand dollar was little changed, holding in a tight range in jittery markets ahead of US inflation data due later in the global trading day.

The kiwi traded at 73.12 US cents as at 5pm in Wellington from 72.93 US cents as at 8am in Wellington and from 73.23 cents late yesterday.

The trade-weighted index traded at 74.01 from 75.03.

The US inflation data is in the limelight as investors try to guess the trajectory of policy tightening by the US Federal Reserve.

The CPI may have slowed to 0.2 percent in February for an unchanged year-on-year rate of 1.8 percent, according to economists.

If inflation is lower than expected it will add to the view that the Fed is only likely to lift rates three times this year, rather than four.  Markets had already pared back their US rate hike expectations after a slowdown in the pace of US wage growth late last week.

The kiwi fell to 77.91 yen from 78.05 yen yesterday and declined to 92.85 Australian cents from 93.06 cents.

It eased to 59.30 euro cents from 59.39 cents and declined to 52.60 British pence from 52.81 pence. The local currency fell to 4.6244 yuan from 4.6333 yuan.

Meanwhile, the Debt Management Office announced that $2.0 billion of 20 April 2029 nominal bonds have been issued via syndication.

The bonds, which carry a coupon of 3 percent, were issued at a spread of 16 basis points over the 15 April 2027 nominal bond, at a yield to maturity of 3.135 percent. Total book size, within the initial pricing guidance range of 16 to 19 basis points, exceeded $5 billion.

New Zealand's two-year swap rate rose 4 basis point to 2.26 percent and the 10-year swap rate was unchanged at 3.25 percent.

Australia & NZ dollars defensive as trade talk dominates

New Zealand Stock Markets

The Australian and New Zealand dollars stayed on the defensive on Monday as rumblings about a world trade war curbed risk appetites and overshadowed the upbeat part of domestic economic data.

The Aussie dollar was off 0.18 percent at $0.7748 and uncomfortably near to recent two-month lows at $0.7713.

The kiwi eased 0.35 percent to $0.7218 and closer to support around $0.7184.

Both countries have open commodity exporting economies that benefit substantially from free trade, making them vulnerable should U.S. President Donald Trump's threat of tariffs lead to a round of tit-for-tat reprisals.

 Lost in the noise was Australian data showing strength in vehicle sales, job ads and approvals to build new homes that augured well for continued economic growth this year.

 Figures due Wednesday are forecast to show Australia's A$1.8 trillion gross domestic product (GDP) expanded by around 0.6 percent in the December quarter.

That would see annual growth slow to 2.5 percent, from 2.8 percent, but it would still mark more than 26 years without a technical recession.

 The Reserve Bank of Australia (RBA) holds its March meeting on Tuesday and is thought certain to keep rates at 1.5 percent and signal it is no rush to hike anytime soon.

 For the kiwi, the next test will be a global auction for dairy, the country's main goods export, which could weigh if prices slip as analysts expect.

New Zealand government bonds eased, sending yields 4.5 basis points higher.

Australian government bond futures recouped early losses as risk aversion slugged stocks across Asia.

The three-year bond contract edged up half a tick to 97.935, while the 10-year contract was off 1 tick at 97.2700

MARKET CLOSE: NZ shares rise

New Zealand Stock Markets

New Zealand shares gained, led by Vital Healthcare Property Trust and A2 Milk Co, as investors prepared for a potential selloff of Fletcher Building once it updates its losses within its construction division.

The S&P/NZX 50 Index rose 63.16 points, or 0.8 percent, to 8,122.22. Within the index, 28 stocks rose, 13 were unchanged and nine fell. Turnover was $120 million.

Tomorrow morning, embattled construction company Fletcher Building's shares are set to be lifted from their trading halt at $7.77. The company will make an announcement increasing the losses at its building and interiors (B+I) unit.
The company was set to come out of the trading halt yesterday but said it had yet to complete a review of key projects and has begun talks with lenders about breaching its banking covenants.

Fletcher has said that before the halt is lifted, it will give the market an update of its review and the status of its discussions with its lenders.

Vital led the index higher, rising 3.4 percent to $2.12. A2 Milk rose 3.1 percent to $9.07 and Meridian Energy gained 2.7 percent to $2.825.

NZX was the worst performer, down 0.9 percent to $1.12. Kiwi Property Group fell 0.8 percent to $1.315 and Tourism Holdings dropped 0.7 percent to $5.54.

Outside the benchmark index, Tower rose 2.3 percent to 66.5 cents.

The Auckland-based insurer said recent storms will have a financial impact of about $5 million after tax.

It said it is too soon to know the extent of the damage done by Cyclone Gita, which hit Tonga last night having already passed through Samoa and American Samoa and may yet impact Fiji.

NZX dodges bullet after a partial recovery on Wall Street

New Zealand Stock Markets

Fears of a steep dive on the NZX sharemarket were averted on Wednesday after a partial recovery on Wall Street took the sting out of what had been expected to be an ugly day's trading.

The NZX50 opened down 1.9 per cent after dodging the worst of the global correction thanks to the Waitangi Day holiday on Tuesday.

It closed down only 0.6 per cent, or 47 points lower, after investors appeared to conclude that the long-forecast correction that has rattled global markets might be over and started hunting for bargains.

Sharemarkets around the world fell sharply on Tuesday, when New Zealand financial markets were closed.

But the S&P 500 index regained 1.75 per cent and the Nasdaq composite index closed up 2.1 per cent on Wednesday morning, New Zealand time, just in time for the reopening of New Zealand exchange.

With stocks calming, investors also unwound safe haven positions in currencies.

That saw the Japanese yen retreat and a rally in riskier plays such as the Australian and New Zealand dollars.

The Aussie was up at 86.40 yen from a low of 84.95, while the U.S. dollar popped to 109.48 yen from a trough of 108.46.

The euro was relatively stable at $1.2377, while the dollar edged up 0.07 per cent against a basket of currencies to 89.647.

Stock market fall is a number game

New Zealand Stock Markets

Some basic numbers illustrate the rationale for the sharp loss in value in US stocks. 

Over the 4 years 2013 to 2017, the average blended forward PE valuation for the S&P 500 index was 16.1 times earnings. The average 10-year bond yield over the same period was 2.17%

Recently both the bond yield and stock market valuations rose in a situation suggesting something might give. The 10-year bond yield is now at 2.7% but the S&P forward PE remains above average at 16.75. It peaked recently at 18.5.

There is a lot more to stock valuation than the simple relationship between the risk free bond yield and earnings yield on stocks. However, these numbers illustrate how vulnerable the market was to a pull back, once the tide of sentiment turned.

The local stock market will open sharply lower this morning but could outperform US markets if the current sell-off extends over coming weeks.

At 15.9, the blended forward PE on the ASX 200 is above the 2013-17 average of 15.2. However, at 2.83% the 10-year bond yield is still below the 3.05% average that applied during that period

The upcoming profit-reporting season could also help the local market fall less than the US if the current sell-off extends

Oil fell last night while base metals were slightly firmer. This indicates that pressure on oil markets is largely about concerns over increasing shale oil supply rather than a general risk off move in commodities.

The Aussie Dollar, on the other hand has been a risk off casualty, falling heavily against major currencies.

The market impact of major data releases today including retail sales, balance of trade and the RBA statement could be important in that context.

Markets would be encouraged if retail sales data can provide further comfort that consumption has continued to recover from its late winter/early spring funk.

NZ dollar hovers below 73 US cents as greenback finds favour on rate outlook

New Zealand Stock Markets

The New Zealand dollar held below 73 US cents amid growing expectations the US Federal Reserve will hike rates more aggressively this year after solid jobs data in contrast to the Reserve Bank which will likely reiterate it won't raise rates anytime soon. 

The kiwi traded at 72.91 US cents as at 5pm in Wellington versus 72.92 US cents as at 8am in Wellington and 73.01 cents on Friday in New York. The trade-weighted index was at 74.58 from 74.69 last week.

The greenback got a boost when the US non-farm payrolls report showed wages growing at their fastest pace in more than eight-and-a-half years, leading futures markets to price in the risk of three or even more rate rises from the Federal Reserve this year as inflation expectations were stoked.

At the same time, New Zealand's Reserve Bank is tipped to keep the official cash rate unchanged and retain a flat outlook at this Thursday's review.

New Zealand's OCR at 1.75 percent compares to the fed funds rate target range of 1.25-to-1.5 percent

The Reserve Bank's first monetary policy review of the year on Thursday will be key for markets, said Slabbert.


Investors will also be taking profits as the New Zealand dollar has "been punching a little above its weight, given the fundamentals and the rate scenario," he said.

Data today from Barfoot & Thompson added to the view the heat is coming out of the housing market.

According to the realtor, the number of houses sold in Auckland fell 5.7 percent in January from a year earlier, even as prices edged lower, with the pipeline of available properties in the country's biggest city swelling to a six-year high.

New Zealand markets are closed tomorrow for the Waitangi Day public holiday. Ahead of the RBNZ, investors will be also be watching December quarter employment figures and the latest GlobalDairyTrade auction on Wednesday.

The local currency traded at 80.16 yen from 80.42 yen on Friday in New York and at 91.94 Australian cents from 92.08 cents. It traded at 58.52 euro cents from 58.58 cents last week and was almost unchanged at 51.64 British pence from 51.69 pence last week. The kiwi fell to 4.5914 Chinese yuan from 4.5991 yuan last week.

New Zealand's two-year swap rate rose 1 basis point to 2.17 percent, while 10-year swaps rose 4 basis points to 3.31 percent.

NZ shares rise; NZ dollar heads for 0.4% weekly gain as payrolls comes into view

New Zealand Stock Markets

New Zealand shares gained, led by Air New Zealand and Fletcher Building, with Z Energy and CBL dropping.

The S&P/NZX50 Index rose 31.42 points, or 0.4 percent, to 8,415.29. Within the index, 23 stocks rose, 17 fell and 10 were unchanged. Turnover was $168 million.

Air New Zealand led the index, up 2.6 percent to $3.13. This week the airline posted December operating figures, showing gains in passengers and revenue passenger kilometres.

Fletcher Building rose 2.1 percent to $7.96, Mainfreight gained 1.5 percent to $26.40, and Tourism Holdings jumped 1.4 percent to $5.84.

Z Energy was the worst performer, down 2.1 percent to $7.41, weakening off throughout the day following a significant line of stock changing hands at $7.45 before the market opened.

Infratil dropped 1.4 percent to $3.17 and Metro Performance Glass fell 1.1 percent to 93 cents.
CBL declined 0.9 percent to $3.17 before being put in a trading halt ahead of an earnings update on Monday.

Outside the benchmark index, Briscoe Group gained 2.9 percent to $3.50. It says full-year sales topped $600 million for the first time, helped by stronger revenue from sporting goods in the fourth quarter, and it expects to report a record annual profit of about $61 million.

Total sales rose 2.6 percent to about $194 million in the 13 weeks ended Jan. 28. Homeware sales climbed 1.3 percent to $124.8 million, although on a same-store basis they were down 0.3 percent, while sporting goods sales rose 5.1 percent to $69 million, or a 4.9 percent same-store gain.

The New Zealand dollar is heading for a 0.4 percent weekly gain against the greenback, which is trading around its lowest levels in more than three years against a basket of currencies.

The kiwi traded at 73.63 US cents as at 5pm in Wellington from 73.66 cents late yesterday and from 73.37 cents a weak ago. The trade-weighted index was at 74.99 from 74.96 late yesterday.

The Reserve Bank is scheduled to release its monetary policy statement next Thursday.

No change is expected to the official cash rate, now 1.75 percent, although inflation has printed weaker than its most recent projections back in November, the trade-weighted index is stronger, and historical gross domestic product data has been revised up.

The kiwi didn't move much after reports showed a pickup in consumer confidence in January, an increase in December home-building consents and a slight dip in annual net migration from near record levels.

New Zealand's two-year swap rate was unchanged at 2.16 percent, while 10-year swaps rose 3 basis points to 3.27 percent.

NZ dollar gains as CPTPP deal reached; growing US protectionism weighs on greenback

New Zealand Stock Markets

The New Zealand dollar gained as investors welcomed an agreement on the regional Asia-Pacific trade and investment pact, while growing US protectionism weighed on the greenback.

The kiwi dollar rose to 73.60 US cents as at 5pm in Wellington from 73.43 cents at 8am and 73.22 cents yesterday. The trade-weighted index gained to 75.43 from 75.21 yesterday.

The local currency got a boost from news negotiators finalised the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership - or CPTPP -  agreement in Tokyo on Tuesday with the 11 nations in the trade pact due to sign it in Chile on March 8.

That put it at odds with the US, where President Donald Trump announced new tariffs on some imported goods and stoking fears about the global trade environment, and adding to the greenback's negative outlook against a backdrop of low market volatility, higher global growth and increased appetite for risk.
 
ANZ Bank New Zealand senior economist Phil Borkin said "any signing of a free trade agreement is a positive," in particular after nerves yesterday when Trump raised tariffs on imports of washing machines and solar panels, raising fears about the White House's protectionist attitude.

Looking ahead, Borkin said the biggest risk for the kiwi will be tomorrow's fourth-quarter inflation data. Economists expect the consumers price index rose 0.4 percent in the three months ended Dec. 31, for an annual increase of 1.9 percent, according to the median in a poll of 13 economists surveyed by Bloomberg.


The kiwi fell to 80.92  yen from 81.10 yen yesterday.

The local currency rose to 91.99 Australian cents from 91.66 cents yesterday and gained to 4.7026 Chinese yuan from 4.6842 yuan. It increased to 52.43 British pence from 52.36 pence yesterday and traded at 59.76 euro cents from 59.73 cents.

New Zealand's two-year swap rate fell 1 basis points to 2.22 percent while the 10-year swaps fell four basis points to 3.25 percent.

ANZ Bank deal to sell UDC Finance to HNA not proceeding

New Zealand Stock Markets

ANZ Bank New Zealand said an agreement to sell UDC Finance to Chinese conglomerate HNA Group for $660 million has terminated after the application was declined by the Overseas Investment Office in December.

The agreement to sell UDC Finance to HNA Group will not proceed as the agreement with HNA has now been terminated in accordance with the contracted timeframe, ANZ said in a release.

Following the termination of the agreement with HNA, we’ll continue to assess our strategic options regarding the future of UDC, although there is no immediate requirement to do anything, said ANZ group executive and New Zealand chief executive David Hisco.

The Overseas Investment Office said it had declined the application because it did not determine who the relevant overseas person was from the information provided about ownership and control interests.


Hisco said UDC continues to be a very profitable business with a strong capital position and also its focus remains on its core business of financing vehicles and equipment for people and companies across New Zealand.

The UDC acquisition would have been the first New Zealand deal for Hainan, China-based HNA, which evolved from a regional airline to a global conglomerate with more than US$90 billion of assets.

However, the company has been coming under increased scrutiny after a debt-fuelled US$40 billion global acquisition spree, and Standard & Poor's warned late last year it would probably downgrade UDC's credit rating if the deal was approved due to HNA's "significant debt maturities over the next several years" which had led to "meaningfully higher" funding costs.

Parent Australia & New Zealand Banking Group's dual-listed shares recently traded down 0.9 percent at $31 on the NZX.

NZ dollar hits fresh 3-month high amid reports China may scale back US govt bond buying

New Zealand Stock Markets

The New Zealand dollar rose to a new three-month high as reports China may cut its purchases of new US government bonds weighed on Wall Street and the greenback.

The kiwi rose as high as 72.28 US cents and traded at 71.90 cents as at 8am in Wellington from 71.64 cents yesterday. The trade-weighted index advanced to 74.82 from 74.66 yesterday.

Stocks on Wall Street and the greenback fell while US Treasuries were also sold off, pushing yields higher, on media reports citing unnamed sources that Chinese officials reviewing the Asian nation's foreign-exchange holdings recommended slowing or completely halting purchases of US Treasuries.

China is the biggest foreign holder of US government debt with US$1.19 trillion of Treasuries as of October last year, and has been placed under increased pressure from US President Donald Trump over the nations' trading relationship.

The kiwi dollar tested topside resistance overnight, but has the feeling that a better run of domestic data over the next week could see this broken.

The kiwi rose to 4.6775 Chinese yuan from 4.6713 yuan yesterday after the report. However, Bank of New Zealand interest rate strategist Nick Smyth warned against reading too much into the reports, given the size of the US bond market meant it was hard for a buyer of China's size to ignore and that until the yuan is freely floated, intervention to limit the Chinese currency's appreciation would stoke demand for the greenback.


New Zealand rates opened higher, with the two-year swap rate up 1 basis point to 2.2 percent and the 10-year swap rising 2 basis points to 3.2 percent.

Japan's yen was the strongest currency overnight in the wake of the Chinese reports, continuing a run since the Bank of Japan trimmed its purchases of Japanese government bonds, which some traders took to indicate a slight policy tightening by the central bank.

The kiwi fell to 80.15 yen from 80.43 yen yesterday.

The local currency gained to 91.64 Australian cents from 91.49 cents yesterday and edged up to 60.12 euro cents form 59.97 cents. It increased to 53.20 British pence from 52.92 pence yesterday.