NZ sharemarket dips, Spark leads decline with near 19% drop – Market close

Spark's shares took a dramatic hit following the company's half-year result. Photo / NZ Herald

The New Zealand sharemarket dropped nearly 1% today with investors voting with their feet after the release of Spark’s half-year result, resulting in a significant value drop.

The S&P/NZX 50 Index closed down 0.99% or 127.78 points, falling to 12,752.58, with 53,197,662 shares changing hands to the value of $196.95 million.

The market was dragged down by those stocks in the S&P/NZX10 index, closing at 12,605, down by 1.52%. There were 46 gainers on the main board and 92 decliners.

Spark was the story of the day, with its share price falling by 18.77% to $2.38, down 55c with 18,036,039 shares trading hands to the value of $43,053,459.08.

Devon Funds Management head of retail Greg Smith said Spark is a pretty clear example of how tough the challenges in our economy are.

“We’ve seen reduced government spending, but also businesses have been cutting back as well. It’s been weakness across the board, generally,” Smith said.

“They [Spark] talked about the recessionary conditions, but they’re taking measures to counter this by reducing costs. Obviously, we’re seeing many businesses do this against the backdrop of a recession. The only area doing relatively well is data centres, but it’s a relatively small part of the business for now.”

Elsewhere Sky Network Television also reported a decline in earnings, with its share price falling 3.08% or 8c to $2.52, with 317,768 shares trading hands to the value of $803,098.30.

“They’ve got some challenges on a couple of fronts with half-year earnings down 26%. I suppose the positives were the Sky Box churn, that’s eased, and streaming appears to be doing pretty well. But people are cutting back and that includes discretionary things like TV.

“I suppose rubbing the salt in the wound for them is the problems they’ve had with the satellite migration project. It’s been a source of customer frustration and a bit of brand damage.

“A big positive for them is they’ve reached a deal with New Zealand Cricket for the Black Caps’ home matches for the next six years.”

In more positive news, Fonterra announced its full-year earnings will be in the “upper half” of its range. The share market responded in turn, with Fonterra’s share price rising by 4.70% or 24c to $5.35, with 96,942 shares trading hands.

Looking ahead to next week, Smith said results to look out for included Heartland Bank – particularly following its announcement of a $49.6m impairment – and gentailers Mercury and Meridian, along with Summerset Holdings.

Wall Street stocks dropped after disappointing results from Walmart as banking shares fell in a move analysts attributed to profit-taking.

Walmart reported quarterly results that met expectations, but shares slid 6.5% after its forecast missed expectations.

Meanwhile, shares of Citigroup, Goldman Sachs and JPMorgan Chase fell 3% or more, dragging on major indices.

The S&P 500, which finished at a record in the past two days, dropped 0.4% to 6117.55.

The Dow Jones Industrial Average fell 1.0% to 44,176.65, while the tech-rich Nasdaq Composite Index declined 0.5% to 19,962.36.

– Additional reporting AFP

Tom Raynel is a multimedia business journalist for the Herald, covering small business and retail.