NZ stocks join global sell-off
New Zealand shares have eased back in a global sell-off as rising geo-political tensions and falling dairy prices took confidence out of the market.
THE NZX 50 Index fell 11.936 points, or 0.2 per cent, to 5092.227 on Wednesday.
Within the index, 21 stocks fell, 14 rose, and 15 were unchanged. Turnover was $123.3 million.
Stocks across Asia followed Wall Street lower, amid ongoing tensions in Ukraine.
Global dairy product prices slumped to the lowest level since October 2012 in the overnight GlobalDairyTrade auction, taking some of the gloss out of New Zealand’s economic recovery.
“We’re following the US lower overnight and also weaker markets around Asia this afternoon,” said Grant Williamson, director of Hamilton Hindin Greene.
“The dairy auction results from this morning show a further decline in commodity pricing has seen our dollar come off a wee bit and seen investors losing a little bit of confidence that the economic pick-up is not going to be as big as expected.”
Momentum stocks were sold off in the loss of confidence.
Pacific Edge, the Dunedin-based biotech company, led the benchmark index lower, dropping 6.7 per cent to 70 cents. Xero, the cloud-based accounting software firm, declined 4.4 per cent to $23.90.
Units in Fonterra Shareholders’ Fund was the best performer on the benchmark index, up 1.6 per cent to $6.20.
Fonterra has slashed its forecast 2015 farmgate milk payout and falling milk prices create fatter margins for Fonterra, while the fund’s units give holders access to Fonterra’s dividend stream.
Fonterra’s “lower input prices into their manufacturing plants is going to boost their profitability as well,” Mr Williamson said.
A2 Milk Co, which exports infant formula to China, rose 1.6 per cent to 65 cents. Outside the benchmark index, Synlait Milk, which processes a2 Milk’s formula and also exports to China, fell 2.6 per cent to $3.35.
Source: theaustralian
