NZX 50 down 0.4% as Israel-Iran conflict intensifies

The benchmark S&P/NZX 50 Index crawled upward until around 2pm when it began reversing its gains, finishing the day down 0.4% on 12,639.35 points.

Over 35.4 million shares were traded, amounting to $122.4m in value.

After rising solidly overnight, Wall Street's gains on the S&P 500 futures were trading down 0.4% at 5 pm, following a tweet by United States President Donald Trump saying: “Everyone should immediately evacuate Tehran!”.

Director and portfolio manager at Salt Funds, Matt Goodson, said that adding to the anxiety, Trump cut short his appearance at the G7 summit in Canada and ordered his national security team to be on standby in the situation room.

“There would appear to be a reasonable risk of the US joining in, given those actions from Trump," he said, adding that despite all this, equity markets had been relatively unperturbed, with most of the action taking place in gold and oil markets.
"Whether the market retains its laid-back view towards [the conflict] remains to be seen.”

The NZX 50

Infratil was the best-performing index constituent of the day, rising 3.94% to $10.82.

Goodson highlighted that the US Senate Finance Committee published a draft version of Trump's 'One Big Beautiful Bill' that made several changes to the one that passed the House of Representatives last month.

Goodson said the draft pulled back some of the cuts the House of Representatives made to Joe Biden-era clean energy tax credits, which would affect Infratil’s Longroad Energy renewables investment.

“That's been seen as a positive, although if it's only that going on, it seems a pretty strong reaction, especially because we know what US politics are like at the moment,” he said.

Bringing the index in the other direction was Fisher & Paykel Healthcare, which fell 1.87% to $36.65 on market-leading volumes.

Tourism Holdings (THL) was traded in high frequencies again on Tuesday after the campervan rental company announced it had received a buyout bid on Monday. Shares were flat at $2.30 on volumes amounting to $8.7m in value traded.

Goodson also highlighted an operating report from Contact Energy, which he described as positive.

“They’re starting to benefit from geothermal generation really ramping up, and it’s rather helpful that some lakes are full."

Contact shares rose 0.55% to $9.17, while its gentailer competitors either traded flat or fell. Meridian Energy dipped 2.18% to $5.82.

Mixed data

Goodson said a couple of Statistics NZ releases gave “mixed signals” for the inflation outlook.

Food prices increased 4.4% in the year to May, following a 3.7% increase in the year to April.

Higher prices for the grocery food group and the meat, poultry and fish group contributed most to the annual increase in food prices, up 5.2% and 5.4%, respectively.

“This validates the slightly harsher OCR track from Reserve Bank in their last monetary policy update, which now only price in one further rate cut,” Goodson said.