Sharemarket gains as upbeat sentiment on travel industry lifts Air New Zealand

Thursday, 11 March 2021

Air New Zealand shares rose, underpinned by positive sentiment around a rebound in travel.

The sharemarket advanced as a tourism subsidy in Australia stoked positive sentiment around the travel industry, helping underpin stocks like Air New Zealand.

The benchmark S&P/NZX 50 index gained 0.2 per cent, or 20.582 points, to 12,272.48 on Thursday.

Australia’s federal government announced a A$1.2 billion (NZ$1.3b) support package to encourage Australians to visit the regions. Qantas said the package would allow it to offer up to 32,000 fares per week discounted by 50 per cent of median prices.

The Australian carrier hopes to resume some international flights by the end of October, when the country expects to complete its national Covid-19 vaccine roll-out, although Australia’s Government hasn’t said when the borders would reopen.

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Z Energy has been hurt by Covid-19, which has reduced the amount of fuel it’s selling.

“Qantas is having a good day and so are a couple of the travel and tourism stocks in Australia, so that rubs off on our stocks as well,” said Dan Stratful, an investment adviser at Forsyth Barr. “It just raises sentiment in the whole sector, especially given that sector has been under a bit of pressure lately.”

Air New Zealand rose 3.3 per cent to $1.70, Auckland International Airport edged up 0.1 per cent to $7.10, and travel software company Serko advanced 0.9 per cent to $5.67.

Fletcher Building rose 1 per cent to $6.82, taking its gain this year to 18 per cent.

“Fletcher Building continues to strengthen,” said Stratful. Cyclical stocks were in favour and strong building consents were providing a good backdrop for the company, he said.

In contrast, Z Energy dropped 3.6 per cent to $2.66 after pulling back its expectations for full-year profit. The fuel retailer said it expects earnings of between $235m and $245m, lower than its previous range of $235m to $265m.

Chief executive Mike Bennetts said the company wasn’t selling as much fuel due to lockdowns, the lack of international tourists, and the drop in air travel. Meanwhile, margins were being crimped as crude prices rose in an environment of intense retail competition, he said.

Still, Stratful said it was positive that Z Energy hadn’t lowered the bottom end of its profit range.

Mercury dropped 3 per cent to $5.88 as investors weighed up the prospect of better returns elsewhere.

“Rising bond yields negatively impact the utility companies,” said Stratful.

“Utility companies will struggle in a rising interest rate environment because people buy them for their dividends and if they can suddenly in the future get a good dividend or interest payment on a bond or a term deposit, then they potentially sell out of Mercury because of that.

“Low-growth and high dividend payers like the property stocks and utilities will face headwinds in a rising interest rate environment,” he said.

Telecommunications network company Chorus fell 2.1 per cent to $7.83.

The newest listing on the sharemarket, meat kit company My Food Bag, continued its slide since its debut last Friday. The shares, which were sold to investors at $1.85, fell 3.6 per cent to $1.63.

Stratful said some investors may have been hoping the shares would jump higher after listing, enabling them to sell quickly for a profit, a move known as stagging. When that didn’t happen, they were disappointed and sold out, he said.

Weaker market sentiment leading up to the listing also didn’t help, he said.

In Asia, stocks climbed higher after a key measure of inflation in the United States came in lower than expected, easing worries that price pressures could push interest rates higher.

Shares rose in Tokyo, Shanghai and Hong Kong but edged lower in Sydney.

On Wall Street, energy and financial stocks rose while Big Tech shares declined. The S&P 500 added 0.6 per cent and the Dow Jones Industrial Average hit a record high, though tech stocks pulled the Nasdaq slightly lower.

– With AP