MARKET CLOSE: NZ shares edge up; rising oil prices keep Air NZ cautious

Wednesday 26th September 2018

New Zealand shares edged higher as improved confidence lifted building and tourism stocks. Rising oil prices kept investors nervous about higher energy costs for companies, and was identified as a headwind for Air New Zealand at its annual meeting.

The S&P/NZX 50 index increased 3.89 points, or 0.04 percent, to 9,349.85. Within the index, 23 stocks gained, 18 fell and nine were unchanged. Turnover was $177.4 million.

Air New Zealand's annual meeting was the highlight for the day and came in the week Brent crude prices rose above US$80 a barrel for the first time in four years. The national carrier enjoyed record earnings in recent years but has warned rising jet fuel costs will weigh on earnings. The shares slipped 0.3 percent to $3.06.

"It's going to be an increasing headwind for the global airline industry as their hedges roll off and oil prices remain high," said Greg Smith, head of research at Fat Prophets.

Auckland International Airport fell 0.8 percent to $7.39. The airport operator raised $150 million through a six-year bond offer.

If energy costs continue to rise, Smith said that will probably keep weighing on global equity markets, especially with the Federal Reserve poised to hike interest rates tomorrow and likely to do so again in December.

Z Energy and New Zealand Refining were both unchanged at $7.25 and $2.58 respectively. Tourism Holdings increased 1.4 percent to $5.68, Mainfreight gained 1.3 percent to $30.21, and Freightways rose 0.9 percent to $7.75.

Fletcher Building led the market higher, up 2.2 percent $6.49. Chorus increased 1.7 percent to $4.84, while Arvida Group gained 1.5 percent to $1.36 and Scales Corp advanced 1.5 percent to $4.90.

Rate-sensitive power companies and property investors were generally lower after a recovery in business confidence reduced the prospect of a rate cut in the coming year. Kiwi Property Group declined 0.4 percent to $1.41, Property For Industry fell 0.3 percent to $1.81, Contact Energy slipped 0.5 percent to $5.85 and Meridian Energy decreased 0.6 percent to $3.35.

Synlait Milk dropped 2.8 percent to $10.95, the biggest decline on the benchmark index, while Fisher & Paykel Healthcare fell 1.8 percent to $14.90.

Outside the benchmark index, NZME fell 1.5 percent to 66 cents after the Court of Appeal released its full judgment upholding earlier rulings blocking a planned media merger with Stuff.

NZ Windfarms rose 4.1 percent to 12.8 cents after the company said it was reviewing its business to deliver value to shareholders, including the possibility of selling the Te Rere Hau windfarm.

Turners Automotive Group fell 1 percent to $2.87 after chairman Grant Baker told shareholders the stock was undervalued relative to broker estimates and core metrics.

(BusinessDesk)

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