Market close: Energy stocks drag down NZ sharemarket

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The New Zealand sharemarket gave up some of its recent hard-earned gains, led down by the energy stocks hit by dry weather in both the North and South Islands.

The S&P/NZX 50 Index fell 89.28 points or 0.7 per cent to 12,678.55, and the index did stage a late recovery after reaching an intraday low of 12,574.25. There were 51 gainers and 94 decliners over the whole market, with 52.36 million shares worth $197.88 million changing hands.

Matt Goodson, managing director of Salt Funds Management, said "the question is, do markets keep on running? The corporate earnings outlook is reasonable without being outstanding, and it depends on whether central banks will maintain their present monetary policy with inflation starting to creep in."

With hydro storage presently well below the historical average, the leading energy stocks were pegged back. Meridian fell 14c or 2.38 per cent to $5.75, and Contact was down 25c or 3.23 per cent to $7.50. Mercury Energy declined 15.5c or 2.27 per cent to $6.665, Trustpower shed 13c to $8.64, and Genesis was up 5c to $3.45.

Goodson said it was unusual for the North and South Islands to be dry at the same time and that's created a problem for the gentailers. There is a tiny bit of nervousness over Government comments about how well the market is functioning.

There was also uncertainty around the investors positioning ahead of the exchange-traded funds selling and people were modestly surprised at how well the Contact and Meridian prices held up - and now they have drifted off.

The extent of the BlackRock iShares Global Clean Energy Exchange Traded Funds selling in Meridian and Contact Energy was shown in the substantial shareholder notices to the NZX. US global investment manager BlackRock reduced its holding in Meridian from 7.09 per cent to 3.33 per cent, selling nearly 100m shares. BlackRock cut its stake in Contact from 14.35 per cent to 4.86 per cent, selling about 66m shares.

In its third-quarter operating report, Meridian said water inflows were 70 per cent of the historical average and 31 per cent lower than the corresponding period last year. Generation was 16.5 per cent lower at a 266 per cent higher average price, and customer numbers and retail sales in New Zealand and Australia were up 5.7 per cent and more than 8 per cent respectively.

Genesis said the recently commissioned Waipipi wind farm provided 77GWh of renewable generation at below our thermal fuel cost, and the Huntly Power Station continued to provide backup, with a third Rankine unit returning to the market.

Travel stocks came back to earth following the start of the transtasman travel bubble - Air New Zealand falling 4c or 2.22 per cent to $1.76, and Auckland International Airport, down 3.5c to $7.695 after reaching an intraday low of $7.42.

Other "bubble" stocks SkyCity Entertainment lost 7c or 2.01 per cent to $3.41; while Serko was up 11c to $6.95.

Fisher and Paykel Healthcare was down 35c to $33.50; a2 Milk fell 30c or 3.36 per cent to $8.62; Fletcher Building declined 14c or 1.95 per cent to $7.04; Chorus decreased 7.5c to $6.47; Port of Tauranga shed 11c to $7.36; and Napier Port was down 15c or 4.18 per cent to $3.44.

Skellerup Holdings rose 8c or 1.86 per cent to $4.39 after providing a strong upgrade to its full-year net profit forecast the day before. Ebos Group broke through the $31 mark, rising 38c to $31.08.

Strong dividend stock Spark climbed 10.5c or 2.4 per cent to $4.48; Summerset Group Holdings rose 10c to $12.10; Infratil was up 9c to $7.09; Seeka increased 10c or 1.98 per cent to $5.15; The Bankers Investment Trust gained 6c or 2.61 per cent to $2.36; and Scott Technology was up 4c to $2.67.

NZME was down 3c or 3.66 per cent to 79c after being fined a total of $100,000 by the NZ Markets Disciplinary Tribunal for breaching the NZX listing rules last year concerning the negotiations to buy Stuff from Australia's Nine Entertainment, and the sudden resignation of its then-chair Peter Cullinane.

Investore Property, managed by Stride Property, was downgraded by one broker from outperform to neutral after failing to use the $100m capital raised publicly because of the demand on its large-format retail property.

Investore's share price fell 2c to $2.13. Fellow property companies Argosy was down 6c or 3.92 per cent to $1.47; Property for Industry declined 5c to $2.81; and Precinct Properties was down 1.5c to $1.63.