by BusinessDesk
The S&P/NZX 50 Index fell 167 points, or 1.2%, to 12983.01. Turnover was $118.8 million.
Investors in the US reacted strongly to the minutes from the Federal Reserve’s most recent meeting, which showed most members of the committee were thinking interest rates would need to go higher.
This is due to both persistent inflation, which it had previously considered transitory, as well as a tight labour market which could be considered a sign of maximum employment.
Non-farm payroll data, the most-watched employment measure, is set to be released on Friday night and will give a further indication on how soon the central bank may raise rates.
The American 10-year Treasury yield rose to its highest level since April last year, while shorter-term bonds – which indicate interest rate expectations – hit their highest levels since early 2020.
Wall Street indices dropped dramatically in response, with the tech-heavy Nasdaq tumbling more than 3% and the benchmark S&P 500 down almost 2%.
Higher interest rates increase borrowing costs for businesses and consumers which can result in less spending. Stock valuations also decline as interest rates are used to discount future cash flows.
The kiwi dollar was trading at 68.26 US cents prior to the release of the minutes but fell sharply to 68.01 cents and continued to decline to 67.69 cents by 5pm.
NZ government bond yields also rose but remained below their 12-month highs, the 10-year bond had the largest move – gaining almost 6 basis points.
NZX-listed tech stocks were among the worst-hit today, taking their cue from highly-priced technology companies overseas.
Church donation platform Pushpay Holdings led the decline as it fell 3.9% to $1.25, cinema software company Vista Group was down 3.7% at $2.32, while fleet management company Eroad dropped 3.2% to $4.84.
The index’s biggest stock, Fisher & Paykel Healthcare, also fell 2% to $32.50, while Port of Tauranga hit a near 12-month low at $6.54.
Media companies NZME and Sky Network Television both fell, 4.2% to $1.38 and 2.6% to $2.58 respectively.
While most stocks moved lower, there were some gains, particularly among stocks that have positive exposure to economic growth.
Vulcan Steel jumped 7.1% to $11.01, on light volume, while its competitor Steel & Tube Holdings gained 1.2% at $1.66.
Restaurant Brands NZ had the biggest gain on the top 50 index, climbing 1.4% to $14.01.
| « Infratil boosts NZX 50 in first session of 2022 | NZ shares flat as investors wait for job data » |
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