Mercury Energy helps NZ sharemarket shrug off weaker fiscal forecasts – Market close

The local index is closing in on double-digit growth this year.

A strong bounce from Mercury Energy helped push the New Zealand sharemarket to a near 1% gain – its third successive rise as it closes in on double-digit growth this year.

While the Government was detailing a bleaker financial outlook, the S&P/NZX 50 Index traded strongly in the afternoon and closed on 12,914.3, up 116.97 points or 0.91% after reaching a morning low of 12,726.24.

The index has climbed 9.65% this year. There was also a late surge in trading, with 40.86 million shares worth $183.85 million changing hands.

The market shrugged off the weaker economic and fiscal forecasts outlined in the Treasury’s Half-Year Economic and Fiscal Update, with a government surplus being pushed out to at least 2029.

The update revealed gross domestic product (GDP) increasing by 1.6% in the year to June 2025, before rising by 3.4% and 2.7% in the following two years. It forecasts GDP per capita dipping into the negative for the second year in a row, before recovering.

Unemployment will increase to 5.4% by next June, slightly higher than forecast in the May Budget, before falling.

ANZ Research said for markets, the key points are the significant increase to bond issuance, a meaningful downgrade to key indicators, and the Treasury sounding less upbeat – “more realistic in our view” – about New Zealand’s growth prospects.

Broadly, the Government is doing what it said it would by keeping spending growth contained in the pursuit of long-overdue fiscal consolidation.

Treasury plans to issue $20 billion or 16% more New Zealand Government Bonds in the four years to 2027/28 than forecast in the May Budget.

In the United States, the Nasdaq Composite hit a record high after rising 1.24% to 20,173.89 points. The leading technology stocks were again in demand ahead of the Federal Reserve meeting and an expected interest rate cut.

Apple (US$251.04), Google owner Alphabet (US$198.16) and Tesla (US$463.02) hit new highs.

At home, Mercury rebounded 26.5c or 4.67% to $5.945 following speculation it will be replaced in the MSCI World Index by Contact Energy, up 2c to $9.03. Meridian gained 9c to $5.74.

“There’s an increasing likelihood that Mercury may come out of the index, but a lot of water still has to go under the bridge,” said Matt Goodson, managing director of Salt Funds Management.

Auckland International Airport, gaining 20c or 2.49% to $8.24, Infratil, up 23c or 1.89% to $12.38; and Mainfreight, collecting $1.08 to $72.35, also provided support to the market.

Skellerup Holdings rose 23c or 4.6% to $5.23; Freightways increased 25c or 2.37% to $10.80; Summerset was up 19c to $12.85; Turners Automotive gained 11c or 2.02% to $5.56; Hallenstein Glasson collected 14c or 1.8% to $7.90; and Port of Tauranga added 6c to $6.60.

KMD Brands increased 2.5c or 6.33% to 42c; Seeka added 8c or 2.54% to $3.23; Eroad was up 2c or 2.13% to 96c; Tourism Holdings collected 4c or 2.08% to $1.96; PGG Wrightson gained 5c or 3.21% to $1.61; and Savor rose 3.6c or 18.56% to 23c.

In the property sector, Investore fell 5c or 4.42% to $1.08; Vital Healthcare Trust declined 5c or 2.72% to $1.79; Goodman Trust was down 3.5c or 1.71% to $2.015; Kiwi was up 3c or 3.31% to 93.5; and Argosy gained 1.5c to $1.025.

Serko shed 10c or 2.64% to $3.69; Comvita was down 3c or 3.66% to 79c; Millennium & Copthorne Hotels NZ declined 6c or 3.26% to $1.78; and Foley Wines fell 8c or 13.33% to 52c.

Rakon decreased 3c or 5.26% to 54c; AFT Pharmaceuticals eased 6c or 2.14% to $2.75; and General Capital was down 1.5c or 5.45% to 26c.

Metro Performance Glass increased 1.2c or 22.64% to 6.5c after receiving a takeover bid at 8c a share from Australian private equity firm Crescent Capital Partners, owner of competitor Viridian Glass New Zealand.

The Metro directors said granting due diligence to a competitor was risky and a combination of Metro and Viridian was unlikely to be approved by the Commerce Commission.

The directors said given the hurdles and risks, they consider it unlikely that it will be in the best interests of shareholders to pursue the proposal.

However, they are open to considering all options, including pursuing a supported rights offer, with conditional offers to underwrite $15m of the capital raise.

Metro said it was still working on a supported rights offer and was talking with four potential investors. Metro has received conditional offers to underwrite $15m of the capital raise.

A day earlier, Metro told the market that the $1.9m investment by Melbourne firm Cowes Bay Group for a 13% stake was called off. Metro and its banking syndicate were unable to reach agreement on key final terms of documentation.