“Just where interest rates are now makes it a bit tougher for our market,” he said.
“There have been some pretty big moves in US bond yields, which have echoed through the rest of the globe,” he said.
“There has been this ongoing contest between interest rates and equity markets.”
US 10-year bond yields traded at 5.13 per cent from below 5.0 per cent at the start of the month.
“That generally has put capital markets on the back foot. We saw some weakness in the US market and some of that has flowed through to this part of the world,” Solly said.
NZ 10 year-bond yields are now at 5.19 per cent, their highest point since 2011, which Solly said placed a higher hurdle on the local market’s ability to deliver competitive returns.
The market overall appeared to be suffering from concerns about higher interest rates after the week’s stronger-than-expected 0.9 per cent gain in GDP for the June quarter.
Fletcher Building lost four cents to $4.62 on the back of economic uncertainty but also perhaps due to “choppiness” before the October 14 election, Solly said.
The late buying surge took Fisher and Paykel Healthcare up from its low point of $21.53 to end at $21.88, down 3c.
The stock, along with its competitor ResMed, has continued to be buffeted by the advent of “GLP-1″ a pharmaceutical product that causes weight loss. FPH’s respiratory products are typically used on over-weight patients.
Ryman Healthcare ended 8c up a $4.62 after announcing that it had extended its bank facilities and made an amendment to its interest coverage ratio covenant. The company’s bank facility limit has been increased by $119 million to $2.6b.
Solly said the new deal gives Ryman some flexibility in the medium term, Solly said.
Shares in Synlait Milk, which reports its annual result on Monday, firmed 2c to $1.27.
The cash-strapped dairy company has already told investors that, after a series of earnings downgrades, they can expect a loss of up to $5 million or a profit of up to $5m.
The company’s announcement this week that it had reached a refinancing deal with its banking syndicate did little to calm nerves in the debt market, where it has $180m on bonds trading on the NZX’s debt platform.
Under the new refinancing deal, Synlait needs to repay $130m by early next year.
“There is a clock ticking but we look forward to getting more detail on Monday,” Solly said.
The bonds, which mature in December next year, were quoted at 17.5 per cent on the NZX debt market compared with 8.3 per cent this time last year.
Meanwhile, the closely aligned a2 Milk saw its share price gain 4c to $4.66.
Fonterra Shareholder Fund units, which give investors access to the co-op’s dividends, continued to strengthen after Thursday’s stronger-than-expected result, finishing up 9c at $3.55.
Auckland Airport, which is involved in a fracas with airlines over congestion at the airport, dropped 10c to $7.79.
The airlines say AIA is selling its customers short and travellers are facing unacceptable delays while the airport has hit back, saying airline tardiness is contributing to passengers’ frustration.
In a sign of sharply escalating tension between the airport company and its airline customers, the airport today released details on international flight delays, which it says show only around half of services are running on time.
An Auckland Airport spokesperson said currently, only 51 per cent of international flights from May to August this year were arriving on time - within 15 minutes of that scheduled.
“Auckland Airport is proud to be the gateway to New Zealand for tourism and freight. As a system we need to be geared to efficiently manage flights, as the economy relies on these international connections.”
Jamie Gray is an Auckland-based journalist, covering the financial markets and the primary sector. He joined the Herald in 2011.
