The sharemarket fell, weighed down by weakness in The a2 Milk Company as investors offloaded their holdings on expectations the specialty dairy company will downgrade its earnings guidance.
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SUPPLIED A2 Milk is out of favour with investors as its sales are hurt by disruptions caused by the Covid-19 pandemic.

The benchmark S&P/NZX 50 Index slipped 0.24 per cent, or 30.115 points, to 12,620.52 on Tuesday.

A2 Milk dropped 5.6 per cent to $7.46, its lowest level in about four years. The dairy company has already cut its earnings guidance several times after the Covid-19 pandemic and border closures disrupted sales, as fewer tourists and international students shipped its products to China.

The stock has declined 13 per cent so far this month after several analysts downgraded their outlook for the company, and investors were offloading the stock, said Peter McIntyre, an investment adviser at Craigs Investment Partners.

“Investors are waiting for another earnings downgrade and are trying to sell before that happens,” McIntyre said. “It’s shown considerable weakness. It’s had a terrible day.

“The selling pressure has remained consistent and gained some momentum.”

In a substantial shareholder notice on the NZX, institutional investor Mitsubishi and related entities disclosed they had reduced their holding to 7.5 per cent from 8.5 per cent.

Electricity generator and retailer Meridian Energy fell 3.5 per cent to $5.49.

Investors were concerned Meridian’s low water storage levels may force the company to buy electricity off rivals, crimping margins, McIntyre said.

Fisher & Paykel Healthcare, the largest stock on the market, gained 2 per cent to $35.48, taking its gain so far this month to 11 per cent.

The company’s breathing respirators have been in hot demand during the pandemic and a rise in the number of people with the virus in India and elsewhere was benefiting the stock, McIntyre said.

NZX, which operates the New Zealand stock exchange, advanced 2.4 per cent to $2.10 after it reported first-quarter revenue rose 13 per cent to $21 million as total equity trades jumped 83 per cent.

Elsewhere, technology companies helped lift stocks modestly higher on Wall Street on Monday, nudging the S&P 500 and Nasdaq indexes to all-time highs.

The S&P 500 rose 0.2 per cent, with only slightly more than half the companies in the index notching gains. Banks and companies that rely on consumer spending were among the winners, outweighing a pullback in household goods makers and health care stocks, among others.

A rally in technology companies, which powered much of the market’s gains in 2020, helped push the Nasdaq to its first record high since Feb. 12. The index fell more than 10 per cent from that peak by March 8, what is known on Wall Street as a “correction”. With Monday’s gain, the Nasdaq has recouped all of its losses from that March slide.

The Dow Jones Industrial Average closed slightly lower, while small company stocks outpaced the broader market, a sign investors are feeling confident about the economy. Treasury yields were broadly higher.

– With AP

Fonterra Co-operative Group Limited has announced it will proceed with an ownership review of Fonterra Australia.

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