NZ sharemarket hit by global inflation fears

An unsettled New Zealand sharemarket had a late surge after being dragged down by rising wholesale interest rates and hotter-than-expected United States inflation.

Thursday, April 11th 2024, 6:30PM

by BusinessDesk

Following a sharp fall on Wall Street, the S&P/NZX 50 Index soon gave up the gains of the day before.

The index recovered with increased trading in the last half-hour matching session and closed at 11,934.31, down 37.61 points or 0.31% after hitting an intraday low of 11,845.04.

There were 62 gainers and 72 decliners on the main board, with 28.56 million shares worth $107.77m changing hands.

The US March consumer price index increased 0.4% representing annual inflation of 3.5%, up from 3.2% in February, compared with forecasts of 0.3% and 3.4%.

The minutes from the last Federal Reserve meeting showed officials were wary about the persistence of inflation, and a resilient economy and strong jobs market were allowing the central bank to take its time with interest rate cuts.

The Dow Jones Industrial Average fell 1.09% to 38,461.51 points; S&P 500 declined 0.95% to 5160.64; and Nasdaq Composite was down 0.84% to 16,107.36.

Jeremy Sullivan, investment adviser with Hamilton Hindin Greene, said initially the US markets were pricing in six rate cuts this year; now it’s down to two and a small chance for a third.

“Inflation is taking longer to come down than the markets priced in and in the meantime bond yields have gone up – and this has impacted interest rate-sensitive stocks such as utilities,” he said.

The US 10-Year Treasury Note yield went back over 4.5% (4.541% the highest this year), and the NZ 10-Year Government Bond yield increased 12.6 basis points to 4.783%.

The five-year swap rate in New Zealand has risen 40 basis points or 10% to 4.6% this month.

Sullivan said the writing was on the wall for a fall in term deposits, and for those investors sitting on the sideline, there’s an attractive entry point into stocks with sound fundamentals.

On the local market

Meridian Energy fell 12c or 2.06% to $5.71; Mercury was down 11.5c to $6.772; Vector eased 6c to $3.75; Auckland International Airport shed 20c or 2.42% to $8.06 on trade worth $11.9m; and Fletcher Building declined 6c to $3.94.

Freightways was down 14c to $8.58; Hallenstein Glasson declined 12c or 1.94% to $6.07; Comvita shed 5c or 2.26% to $2.16; Scales Corp eased 6c or 1.84% to $3.20; and Colonial Motor Co decreased 20c or 2.35% to $8.30.

Synlait Milk was down 3c or 4.84% to 59c; CDL Investments decreased 2c or 2.53% to 77c; Smartpay was down 5c or 3.23% to $1.50; and Eroad fell 4c or 4.49% to 85c.

Tourism Holdings was up 8c or 2.75% to $2.99; Rakon increased 4c or 3.51% to $1.18; AFT Pharmaceuticals added 9c or 2.86% to $3.24; 2 Cheap Cars was up 2c or 2.56% to 80c; and Cooks Coffee also gained 2c or 8.33% to 26c.

In the property sector, Argosy added 2c or 1.76% to $1.155, and Kiwi also gained 2c or 2.38% to 86c.

NZME, up 1c to 88c, told shareholders at the annual meeting that digital revenue for its OneRoof property business rose 69% year-on-year, with operating earnings (ebitda) of $1.4m for the first quarter ending March compared with a loss in the previous year.

NZME said overall advertising revenue was up 4% year-on-year, reflecting its increased market share. The broadcaster and publisher forecast full-year ebitda of $57m-$61m compared with $56.2m last year and remained cautious because of the current operating environment.

Chatham Rock Phosphate gained 0.006c or 4.14% to 15.1c before going into a trading halt at the request of market regulator NZ RegCo. Chatham Rock was asked to explain the nature of the application process after telling the market it had been invited to apply for the fast-tracking process concerning its Chatham Rise phosphate project.

ArborGen Holdings, unchanged at 16c, earlier told the market full-year operating earnings (ebitda) is expected to be at the upper end of previous guidance of US$11.6m-$12.6m (NZ$19m-20.74m). Net debt is expected to be 25-35% lower than previously advised.

Cannasouth, in administration and suspended from trading, told the market chief executive Mark Lucas has resigned and left the medicinal cannabis company.

Tags: Market Close