MARKET CLOSE: NZ shares slip as heightened US volatility underlines overseas influence, A2 falls

New Zealand stocks declined as heightened volatility in US equity markets increases the influence of overseas investors on the local bourse. A2 Milk Co, a favourite stock among foreign investors, fell. 

The S&P/NZX 50 index decreased 30.45 points, or 0.4 percent, to 7188.06. Within the index, 23 stocks fell, 14 rose, and 13 were unchanged. Turnover was $133 million. 

New Zealand's stock market was one of the few to decline across Asia today, having outperformed the region yesterday. Wall Street was mixed, with the Dow Jones Industrial Average falling on weaker earnings from IBM, although other results such as Morgan Stanley beat expectations and saw the broader Standard & Poor's 500 index edge higher. 

"We're really taking our leads from offshore and I wouldn't underestimate the important of offshore ETS (exchange traded funds) type money in New Zealand markets, driving us in a day-to-day sense," said Matthew Goodson, managing director at Salt Funds Management in Auckland. "US markets have been more volatile in the last week or two."

Goodson said the March quarterly earnings season in the US has been mixed so far, and investors are still unsure about whether the new US administration will be able to pass its legislation programme of tax reform and infrastructure projects. 

A2 led the market lower, falling 2.5 percent to $3.11. The milk marketing firm has been heavily traded by international investors in recent months with A2's distribution channels in China seen as robust and offering good exposure to rising consumer demand for infant formula in the world's second-largest economy. 

Real estate investors Property for Industry fell 2.4 percent to $1.62 and Precinct Properties New Zealand was down 2 percent to $1.20. Local data today showed a faster pace of inflation than expected, stoking speculation the Reserve Bank may hike interest rates earlier than anticipated and reducing the attraction of property stocks that typically offer investors a high dividend yield. 

Air New Zealand fell 2.2 percent to $2.44 and exporter Fisher & Paykel Healthcare was down 1.2 percent to $9.60 as the kiwi dollar rose on the prospect of higher interest rates, making international flights to New Zealand more expensive and reducing the value of export receipts from the US. Auckland International Airport decreased 1.6 percent to $6.69. 

Z Energy declined 1.6 percent to $7.27 after its quarterly operating update showed a dip in fuel volumes from a year earlier, although Salt's Goodson said that was in line with expectations. 

Restaurant Brands New Zealand fell 1.9 percent to $5.25 after the fast food operator posted a 7.8 percent increase in annual profit to $26 million as its recently acquired Australian KFC bolstered earnings and its local KFC franchise generated record sales. The company projected annual earnings to rise by about a third in the coming year, and Goodson said Restaurant Brands traditionally gave conservative guidance, so investors were trying to work out how conservative the firm was being. 

NZX posted the biggest gain on the day, up 1.9 percent to $1.08. 

Mercury NZ rose 1.3 percent to $3.16. The electricity generator-retailer increased annual earnings guidance as the unseasonably rainy weather saw bigger-than-normal inflows into the Waikato catchment bolstering the outlook for hydro generation. Rivals Meridian Energy and Genesis Energy also rose, up 0.4 percent to $2.77 and 0.7 percent to $2.085 respectively. 

Spark New Zealand rose 1 percent to $3.615 and Fletcher Building gained 0.9 percent to $7.85, bouncing from a year-low. 

Outside the benchmark index, Abano Healthcare rose 1.1 percent to $8.65 after the medical services investor said it will sue Healthcare Partners over unpaid costs arising from the failed partial takeover tilt made by its biggest shareholder. 

NZAX-listed Cooks Food Group was unchanged at 7 cents. The company, which owns the master franchise rights for the Esquires Coffee chain outside New Zealand and Australia, says it’s on track to boost its coffee house network by more than 40 percent by the end of the 2018 financial year. 

(BusinessDesk)