NZX closes lower as record gold prices prompt investor caution

Tuesday, 28 July 2020

The New Zealand sharemarket closed down 0.06 per cent on Tuesday as investors remained cautious ahead of US companies’ end-of-year results, and with gold prices rising.

The NZX50 closed 109 points, at 11,578.270.

Craigs Investment Partners head of private wealth Mark Lister said after trading high for most of the day, the NZX softened over the course of the afternoon.

“Markets are slightly cautious compared to where they were at two or three weeks ago as investors prepared for heavyweight companies on the US markets, Amazon, Apple, McDonalds, Visa to begin reporting their financial year results over the next two or three days,” Lister said.

* New Zealand shares slip 1.7 per cent despite rebound on global markets

* NZX opens up 0.2% as global markets swing up

“Those results will probably be good results, Amazon, for example, which has been a beneficiary of this pandemic, but on the other side of that the share price has already had a good run. The question is whether the results are going to be good enough to move share prices.”

Gold prices jumped to US$1946.72 (NZ$2923) an ounce on Tuesday, eclipsing the previous high of US$1920 set during the financial crisis in September 2011.

The NZX top 50 closed 109 points or 0.06 per cent at 11,578.270.

The new high was related to fears about the impact of Covid-19 globally and the widening trade row between the US and China, Adam van Sambeek, treasury manager at Morris & Watson, said.

Lister said historically high gold prices raised alarm bells among investors as the metal was used as a hedge against the prospect of other investments like shares turning south.

Lister said Tuesday was a quiet day on the NZX with no major announcements as companies were “tightlipped” ahead of their earnings results due in the later half of next month.

“While we wait for our companies to start reporting on their financial performances next month, we’ll be closely following the US markets.”

On Tuesday afternoon, Amazon’s share price was up 1.54 percent or US$46.30 (NZ$67) to US$3055.

Air New Zealand announced it was extending its freeze on bookings for a further two weeks until August 9. Its share price closed up 76 per cent, or up 1 cent at $1.325.

Auckland International Airport fell 1.59 per cent or 10c, closing at $6.20.

But Lister said this was mostly expected, due to the impact Covid-19 had on tourism and the spread of Covid-19 in Australia.

“The Trans-Tasman bubble all of a sudden looks really far away. Things aren’t in control at all.”

Lister said on Wednesday the NZX would likely mirror Wall St’s performance overnight.

“Over the next fortnight I can see our market completely beholden to what happens internationally,” Lister said.

Tourism Holdings rose 3c or 1.78 per cent to $1.72.

Among other top 10 stocks, Fisher & Paykel Healthcare fell 26c, or 0.74 per cent, to $34.85, A2 Milk Company rose 5c, or 0.05 per cent, to $20.75, Contact Energy fell 6c, or 1.04 per cent, to $5.70, Ryman rose 14c, or 1.07 per cent, to $13.26, and Meridian Energy also fell 5c or 1.05 per cent to $4.70.

Infratil rose 4.5c, or 0.93 per cent, to $4.80, Spark was up 2.5c, or 0.51 per cent, at $4.905, Fletcher Building rose 4c, or 1.15 per cent, to $3.51, and Mainfreight was up 34c, or 0.8 per cent to $42.99.