Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

NZ shares bounce back from initial US election selloff

Thursday 10 November 2016 10:48 AM

NZ shares bounce back from initial US election selloff; NZX 50 jumps 3.3%, bond yields surge

By Sophie Boot

Nov. 10 (BusinessDesk) - New Zealand shares rallied in early trading, regaining ground shed in the immediate aftermath of Donald Trump victory, as equity market investors deemed the change at the White House would benefit US economic growth.

The S&P/NZX 50 Index had its biggest fall in almost 8 years yesterday, down 3.3 percent on the day as it became increasingly apparent Trump would take out the US presidential race, with every stock on the benchmark index dropping.

Ten minutes after the market opened this morning, the local index had risen 3.3 percent, or 220.74 points, to 6,864.95. Some 43 stocks rose, seven were unchanged and one was trading lower. The biggest winner was A2 Milk Co, up 10.2 percent to $2.16, while Heartland Bank rose 5.6 percent to $1.50.

Markets across Asia were unsettled yesterday afternoon but US stocks gained sharply overnight local time as Wall Street came to terms with the political upset. The Dow Jones Industrial Average rose 1.4 percent and the Standard & Poor's 500 Index climbed 1.1 percent.

"Obviously we were at the forefront of trading as all news was coming out and there was an immediate huge reaction which is unwinding to a degree today, particularly after the US bounce," said Matt Goodson, managing director at Salt Funds Management.

"What was interesting overnight was quite a sharp selloff in US bond yields - the US ten-year is up almost 22 basis point, the US 30 year is up about 25 basis points, and yield-sensitive sectors were down overnight," Goodson said. "Obviously we have a very large portion of yield-sensitive stocks, with the gentailers, Spark, Auckland Airport and the property stocks in our market. It'll be very interesting to see what happens once these initial short-term reactions play out."

Longer-term interest rates followed suit in New Zealand today. The yield on 10-year government bonds jumped 23 basis points to 2.99 percent, the highest since late March. The 10-year swap rate soared to 3.11 percent from 2.94 percent.

Meanwhile, the CRB Index of commonly traded commodities rose 0.2 percent overnight, despite concerns that a Trump presidency will discourage global trade given he campaigned against the Trans-Pacific Partnership agreement.

The trade-weighted index was virtually unchanged from yesterday at 78.65, as the kiwi rebounded against the Japanese yen but fell against the US dollar.

"Commodities rose sharply overnight which was a surprise at a time where one of the cornerstones of Trump has been more difficult trade relationships with China and potential tariffs on Chinese products," Goodson said. "It's important to remember there are a lot of quantitative funds in the market, far more than has been the case historically, and they tend to trade off stock factors like volatility, yield or baskets of attributes as opposed to stock-specific news, so that was certainly something that whacked New Zealand last night."

(BusinessDesk)

ends

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

Air New Zealand: Capital Raise Deferred

Air New Zealand has decided to defer its planned capital raise to later in 2021 allowing more time to assess the impacts of recent developments on the airline’s path to recovery. 'We’ve seen some clearing of COVID-19 clouds recently, with ... More>>

Commerce Commission: Cartel Conduct Now Punishable By Up To 7 Years’ Jail Time

Cartel conduct can now be punished with a term of imprisonment of up to 7 years, after the Commerce (Criminalisation of Cartels) Amendment Act 2019 came into effect today. Cartel conduct includes price fixing, market allocation and bid rigging (see ... More>>

Stats NZ: Auckland Population May Hit 2 Million In Early 2030s

Auckland’s population may rise from about 1.7 million currently to 2 million by early next decade, Stats NZ said today. “Auckland will likely have the highest average annual growth of New Zealand’s 16 regions over the next 30 years, from ... More>>

Air New Zealand: Business Travellers Return To The Skies In Record Numbers

After a year of talking to a computer, Kiwis are leaving the office to re-connect with their clients, suppliers, and staff. New figures released by Air New Zealand show domestic business and corporate travel has defied global trends by returning ... More>>

PwC: Outcome Of Review Into Air New Zealand Gas Turbines Business

Air New Zealand has received the report into its Gas Turbines business from independent external advisers PwC. Air New Zealand Chairman Dame Therese Walsh says the report identified a range of effective controls in the Gas Turbines revenue contracting ... More>>

LPG Association: Renewable LPG Achieves Emissions Budgets With No Need To Ban New LPG Connections

Renewable LPG can supply New Zealand’s LPG needs and achieve the emissions reductions proposed by the Climate Commission without the need to ban new connections, a new study shows. The investigation, by leading consultancy Worley, was prepared for the ... More>>

Commerce: House Values Continue To Climb As New Government Measures Announced

The Government’s new initiatives to quell the rocketing housing market were announced last week, just as house prices hit a new high for the end of March. The average value increased 7.8% nationally over the past three-month period, up from the 6.8% ... More>>