NZ shares flat as global tensions rise over potential Iran strike by Israel

The S&P/NZX 50 Index closed up 0.34% or 43.17 points, rising to 12,649.10, with 36 million shares changing hands to the value of $123m.

The S&P/NZX 20 index closed at 7,446.67, up 0.23%, while the S&P/NZX 10 index ended the day at 1,900.99, a rise of 0.35%.

There were 71 gainers and 64 decliners on the main board.

'Overarching backdrop'

Salt Funds Management managing director Matt Goodson said investors were feeling the pressure of spiking oil prices internationally.

“Probably the overarching macro news from this morning, our time, was the US market closed not down a lot, but closed on its lows, and oil was up quite sharply on reports that Israel is about to launch something on Iran,” Goodson said.

“The direct relevance to the New Zealand markets is limited; it’s more the overarching backdrop for equity markets.”

Goodson joked that there were as many views on oil prices as there are investors, but he explained that three areas are driving the concern.

Of course, what occurs in Iran is one concern, but another is the level of Russian oil that still faces very tough sanctions.

“The third thing is US shale production, which has been a key growth in oil production in the last few years, but it seems to be peaking and perhaps even just starting to roll over a little bit.”

Fletcher and Spark in news

As for local markets, Goodson said movements on the board were relatively random in nature.

Shares in Fletcher Building fell 0.91% to $3.28, down 3c, after the news yesterday that it had received inquiries from parties interested in buying its businesses.

Elsewhere, Spark shares were flat after rumours spread that international private equity firm KKR had shown interest in buying the business.

It did see a lot of movement, however, with 6,841,492 shares trading hands to the value of $16m.

“To be honest, we struggle with it a little bit given that Spark is already relatively geared and has sold off a number of assets,” Goodson said.

“What’s left for private equity isn’t quite so clear, although it still does generate reasonable cash flow as a business. It’s just paying out too much of it as a dividend at the moment, which it’ll have to cut.”

As for Ryman Healthcare, its share price has returned to the value it was just a few days ago.

Shares in Ryman fell 2.23% to $2.19, down 5c.

Most Asian markets down

Most Asian markets fell on Thursday, with Tokyo, Hong Kong, Shanghai, Wellington, Taipei and Jakarta in the red after a broadly healthy run-up this week. There were gains in Sydney, Singapore and Seoul.

The weak performance followed losses on Wall Street, where trade worries overshadowed another below-forecast inflation reading, which provided fresh speculation that the US Federal Reserve will cut interest rates.

Oil prices slipped but held most of Wednesday’s (US time) surge of between 4% and 5% that came after US President Donald Trump said US personnel were being moved from the potentially “dangerous” Middle East as Iran nuclear talks stutter.

The move came as Tehran threatened to target US military bases in the region if a regional conflict broke out.

–  Additional reporting by AFP.