NZX 50 down slightly as Covid-19 Delta variant worries investors

Tuesday, 20 July 2021

The New Zealand sharemarket closed down slightly on Tuesday as the spread of the Covid-19 Delta variant continues to worry investors.

After a mixed day, the benchmark S&P/NZX 50 index closed at 12,651, down just one point or 0.01 per cent.

Hamilton Hindin Green investment adviser Jeremy Sullivan said several stocks were affected by ongoing concerns about the global spread of the Delta strain.

“Markets are obviously concerned about what that's going to mean in terms of future lockdowns and economic uncertainty.

The spread of the Delta variant of Covid-19 continues to worry investors.

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“That’s in the face of rising inflation in New Zealand and globally – that theme is pretty well established.”

SkyCity Entertainment Group was among the stocks affected by Covid-19. The company’s share price fell 3.6 per cent on news that its Adelaide casino and entertainment facilities would be closed until at least July 27 because of a seven-day lockdown in South Australia.

The a2 Milk Company’s share price also finished down on Tuesday as new outbreaks and lockdowns caused further disruption at ports, Sullivan said.

“They [a2 Milk] had been showing some green shoots for a while there in terms of making headway into getting their products into China, but I think the market is looking at that and concluding that there may be further disruption and delays for them.”

Despite having raised its operating earnings guidance to between $405 million and $410m, including a carbon expense under a fixed-price option, Genesis Energy’s share price fell 9 cents to $3.37 a share.

“Obviously they’re looking to be a bit greener, but whilst there was an increase in earnings guidance, the market was expecting it and was slightly disappointed,” Sullivan said.

The announcement of TIL Logistics Group chief executive Alan Pearson’s resignation also triggered a downturn, with the stock falling 3.2 per cent to $1.20 a share.

Ahead of reporting season next month, dynamics including inflation, rising interest rates and Covid-19 would be playing on investors’ minds, Sullivan said.

“Ironically, if Covid spreads that will dampen those inflation and interest rate increase expectations.”