Sharemarket slips as higher interest rates loom; Steel companies gain
Thursday, 4 November 2021
The sharemarket slipped as higher interest rates loom, but a buoyant construction market underpinned gains in newly listed Vulcan Steel, and Steel & Tube.
The benchmark S&P/NZX 50 Index fell 49.888 points, or 0.4 per cent, to 12,943.94 on Thursday.
Steel distribution company Vulcan Steel lifted 0.9 per cent on its debut, to $7.50.
The company raised A$371.6 million (NZ$386m) in its initial public offer for 52.3 million shares, with its primary listing on the ASX. It is the sixth company to join the NZX this year.
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“It’s a good story, a homegrown company riding demand for steel amidst the local and global re-opening and firming construction markets,” said Devon Funds Management head of retail Greg Smith.
“It’s good to have a new name on the board today and there looks to be solid appetite there in a down market.”
Smith said the global IPO market was buoyant, with US$330 billion (NZ$462b) raised in the first nine months of the year, underpinned by an increase in retail investors, increased liquidity, and companies taking advantage of elevated valuations to raise capital or sell down holdings.
Still, he said New Zealand IPOs had been “thin on the ground” and the local market had missed out on the IPO rush seen in other global markets.
Meanwhile, building products company Steel & Tube gained 1.6 per cent to $1.25 after saying its revenue rose 14 per cent in the first four months of the new financial year. The stock touched $1.28 in intraday trading, the highest level for more than three years.
“It’s very positive they can turn in that sort of a performance despite the Covid restrictions which are obviously ongoing in Auckland in particular. That’s pretty commendable,” Smith said. “Global demand for steel is robust.”
Still, with the Reserve Bank and others seeking to cool the housing market, property and retirement village stocks were lower, he said.
The Reserve Bank is expected to increase the benchmark interest rate towards the end of this month, prompting trading banks to hike their interest rates, he said.
“Cooling now will avoid a bigger problem down the track,” Smith said.
Ryman Healthcare slipped 0.4 per cent to $14.10, Summerset fell 2.4 per cent to $14, and Oceania Healthcare slipped 0.7 per cent to $1.35.
Precinct Properties fell 0.6 per cent to $1.60, Argosy Property fell 1.9 per cent to $1.515, Property For Industry fell 1 per cent to $2.87, Stride Property fell 0.4 per cent to $2.29, and Goodman Property fell 1.8 per cent to $2.405.
Z Energy was unchanged at $3.61 after reporting a $92m first-half profit, a turnaround from a $58m loss in the same period the previous year.
Smith said the result was “a bit moot” given the company was being taken over by Australian fuel retailer Ampol.
Elsewhere, Asian shares rose, boosted by the announcement from the US Federal Reserve on winding down the extraordinary aid for the economy it has been providing since the early days of the pandemic.
On Wall Street, the S&P 500, the Dow Jones Industrial Average and the Nasdaq set their latest record closing highs.
- With AP