Market close: NZ sharemarket ends week with another big fall

Mercury Energy fell 26c or 4.48 per cent to $5.55 after downgrading its full-year operating earnings. Photo / Supplied

Investors are now looking to a solid reporting season next month to arrest the slide in the New Zealand sharemarket, which ended a turbulent week with one of its biggest single-day falls.

The S&P/NZX 50 started falling at lunchtime after a bright morning and closed at 11,852.15, down 198.17 points or 1.64 per cent after reaching an intraday high of 12,101.11.

The index was down more than 4 per cent for the week, it fell through the 12,000 mark for the first time since early October 2020, and it is now more than 12 per cent below the all-time high of 13,558.19 (on January 8 last year) – well and truly in correction territory.

There were 52 gainers and 91 decliners over the whole market on much-improved volume of 40.47 million share transactions worth $201.64 million.

Dan Stratful, investment adviser with Forsyth Barr, said the market has had to price in a lot of situations lately: rising interest rates, Covid restrictions and now staff absenteeism caused by Omicron.

"There are plenty of headwinds. For any turnaround, company earnings need to hold up and support the market. I don't think anyone is expecting weak financial results and the latest reporting season should get a pass mark."

Stratful said if the markets continued to deteriorate, would the central banks have sympathy and readjust the trajectory of interest rate hikes. "I guess the economy matters more than the sharemarket, and it has to stand on its two feet and get used to the fact that interest rates are going up."

Mercury Energy fell 26c or 4.48 per cent to $5.55 after downgrading its full-year operating earnings (ebitdaf) forecast to $570m, from $590m, because of an expected fall of 150GWh to 3750GWh in hydro generation resulting from the dry weather in the Taupo catchment. Mercury's customer numbers declined 1000 to 327,000 during the first quarter.

Other energy stocks suffered. Contact was down 10c to $7.55; Meridian fell 16c or 3.56 per cent to $4.34; and Vector declined 15c or 3.85 per cent to $3.75.

Market leader Fisher and Paykel Healthcare was down $1 or 3.45 per cent to $28 on trade worth $43.69m; Mainfreight shed $1.70 or 1.98 per cent to $84; Auckland International Airport fell 19c or 2.61 per cent to $7.10; and Port of Tauranga declined 14c or 2.16 per cent to $6.35.

The retirement village sector continued to be hit. Ryman Healthcare went under $10, falling 35c or 3.43 per cent to $9.85 – reaching its lowest level since late March 2020. Summerset Group Holdings was down 17c to $11.91; Arvida declined 2c to $1.69; and Oceania Healthcare fell 5c or 4.2 per cent to $1.14.

Stratful said there were a lot of fears for the retirement/aged-care sector with the housing market outlook not looking good and cost pressures on hiring staff. Resales are likely to be affected by the Covid restrictions with people not being able go through the villages.

Fletcher Building shed a further 6c to $6.48; Steel & Tube fell 5c or 3.16 per cent to $1.53; Vista Group was down another 7c or 3.38 per cent to $2; NZME declined 5c or 4.24 per cent to $1.13; and Harmoney decreased 4c or 2.17 per cent to $1.80.

Retailers The Warehouse Group fell 11c or 3.48 per cent to $3.05, and Hallenstein Glasson was down 12c or 1.84 per cent to $6.40.

Mānuka honey producer Comvita declined 7c or 2.03 per cent to $3.38; Tourism Holdings decreased 6c or 2.19 per cent to $2.68; Scales Corporation fell 18c or 3.6 per cent to $4.82; Pacific Edge was down 4c or 3.42 per cent to $1.13; and Gentrack slid 7c or 3.89 per cent to $1.73.

Among the gainers, Chorus was up 13.5c or 2.01 per cent to $6.84; Napier Port increased 4c to $2.97; Air New Zealand gained 2.5c or 1.78 per cent to $1.43; Rakon recovered 6c or 3.49 per cent to $1.78; Livestock Improvement Corporation collected 5c or 3.85 per cent to $1.35; and Move Logistics was up 3c or 2.01 per cent to $1.52.

AMP told the market it will be delisting on February 4 with the final day of trading on February 2, and its share price gained 5c or 5.43 per cent to 97c.

General Capital is now forecasting an increase in net profit to $900,000-$1.1m, up from $650,000-$850,000, for the year ending March and its share price was up 0.001c or 2.04 per cent to 5c.