by BusinessDesk
The S&P/NZX 50 Index gained just 3 points and closed at 13,229.2. Turnover was $130 million.
Still, the local index is outperforming others with the ASX 200 down 2% today and the S&P 500 falling 4% during September – its first monthly decline in almost a year.
Equity markets are under pressure due to a range of concerns including elevated inflationary pressures which could lead to monetary policy tightening sooner rather than later.
This move to curtail global inflation from important central banks, such as the US Federal Reserve, would likely cause a slowdown in global growth. NZ’s own central bank looks ready to raise domestic interest rates next Wednesday, as the Reserve Bank of New Zealand (RBNZ) moves to head off inflation.
“For the RBNZ, their least regret is to nip any potential wage-price spiral in the bud by gradually raising the OCR to a level that is no longer stimulatory, while being prepared to change tack as the picture could change abruptly,” said ANZ chief economist Sharon Zollner.
However, she warned the RBNZ may not be able to get interest rates to the exact level they are planning.
“The odds of something turning pear-shaped is significant. That could be a hard landing for the NZ housing market or a hard landing for global equity markets and risk appetite,” she said.
Utility stock Vector led the market gains, up 3.2% at $4.15, followed by Skellerup which rose 3.1% to $6.04 and A2 Milk continued its rally up 2.6% to $6.60.
Sky Network Television had the day’s biggest decline, falling 2.6% to $1.91.
Australian banks had sharp falls after a strong day yesterday.
Shares in ANZ Bank were down 2.2% at $28.69, while Westpac Bank slipped 2.1% to $26.58.
Cannasouth shares were unchanged at 40 cents after it reported failing to raise enough capital to buy its cultivation joint venture, raising a total of just $4.7m and scuttling the proposed acquisition.
Kiwi Property bought another 7,144 square metre property at Sylvia Park for $27.5m with settlement due on June 24 2022. The property is next to the lifestyle part of Kiwi's shopping, cinemas, office and soon-to-be build-to-rent (BTR) complex.
The company’s share price was also unchanged at $1.15.
The manager of Vital Healthcare Property Trust said it had secured A$315m of new debt facilities with improved pricing which will replace ones expiring this summer. Units in the trust rose 0.3% to $3.07, today.
In currency markets, the uneasy global sentiment saw the NZ dollar remain weak. It was trading at 69.89 US cents late Friday afternoon – a level only seen once since November 2020. ANZ’s Zollner said volatility re-rated prospects for the local currency, which had been a “star performer due to abundant liquidity and the strength of the domestic economic rebound”.
She said the currency was likely to face headwinds as these factors fade, with the economic rebound now under threat from a delta outbreak that looks likely to linger.
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