MARKET CLOSE: NZ shares fall as Fletcher Building speculation weighs

New Zealand stocks fell as Fletcher Building dropped near a year-low with speculation the firm is vulnerable to a corporate raid and as global equity markets were subdued with the protracted stand-off between the US and North Korea and weaker-than-expected US company earnings.

The S&P/NZX 50 index declined 15 points, or 0.2 percent, to 7,218.52. Within the index, 29 stocks fell, 13 rose and 8 were unchanged. Turnover was $138 million.

Australia's S&P/ASX 200 index was down 0.5 percent in afternoon trading while China's Shanghai Stock Exchange Composite Index fell 0.8 percent after the Dow Jones Industrial Average fell 0.6 percent on Wall Street. Geopolitical uncertainty coupled with a disappointing earnings report from Goldman Sachs Group and Johnson & Johnson weighed on sentiment.

"It's a bit of a down day today, following Wall Street and some of the Asian markets. Some of our leading stocks have been hit relatively hard," said Hamilton Hindin Greene Broker Grant Williamson.

On the local bourse, Fletcher Building shed 3 percent to $7.78, its lowest level in almost a year. The stock has shed 27 percent in the year to date, coming under pressure after unexpectedly weak earnings from its construction division followed by an earnings downgrade. Meanwhile, speculation re-emerged Tuesday about a break-up or buyout of Fletcher Building with investment banks said to be working on pitches on the other side of the Tasman, according to an Australian media report.

Fisher and Paykel Healthcare, which derives more than half its revenue in the US, lost 0.8 percent to $9.72 and the exporter may have been impacted after the kiwi currency gained to 70.44 US cents from 70.06 cents yesterday.

Outdoor equipment chain Kathmandu Holdings led the index lower, falling 4.5 percent to $1.92.

In the other direction, Williamson said that investors were still turning to high yielding stock in a nervous market, which was benefiting Contact Energy, up 0.4 percent to $5.10 and Spark New Zealand, up 1.3 percent to $3.58. He noted that telecommunications companies fared much better across the Tasman on the day, which was likely also benefiting Spark. "They have been under significant pressure but have all bounced relatively well today," he said.

Units in the Fonterra Shareholders Fund added 0.2 percent to $6.05 after whole milk powder prices rose by 3.5 percent in the latest Global Dairy Trade Auction.

Outside the benchmark index, Williamson noted Scott Technologies continued to have a strong run, adding 3.5 percent to $3.24. Earlier this month, the company said net profit was $2.89 million in the six months ended Feb. 28 versus $1.95 million a year earlier. Revenue was $56.7 million, up 32 percent on the year.

Ryman Healthcare rose 1.5 percent to $8.67. Deutsche Bank lifted its target price 3.4 percent to $8.27 while Dow Jones Newswires quoted Macquarie as saying it was unlikely to be impacted by a new pay scale that closes a gap between so-called carers and nurses as the raise is being funded by the government.

Looking ahead, investors will remain focused on any news out of the US, including corporate earnings, for direction.

(BusinessDesk)