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Shares rise as bond yields surge

New Zealand's sharemarket gained on Tuesday as a selloff in bond markets pushed yields to multi-year highs.

Tuesday, March 22nd 2022, 6:10PM

by BusinessDesk

The S&P/NZX 50 Index rose 27 points, or 0.2%, to 12,204.69. Turnover was $155 million.

NZ government bond yields leapt to a six-year high, following the US bond market which jumped after the US Federal Reserve chair warned monetary policy could be tightened to a restrictive level.

Mary Jo Vergara, an economist at Kiwibank, said the key message had been that more aggressive rate hikes could be on the cards after they began raising rates last week.

“They’re keeping their options open in terms of what they can do to get inflation back on target,” she said.

Michael McCarthy, chief strategy officer at Tiger Brokers Australia, said the combination of increasing post-covid demand, supply bottlenecks and disruption caused by Russia's invasion of Ukraine means the central bank has “little choice but to pump the brakes hard”.

The yield on a 10-year NZ government bond hit 3.3% today for the first time since 2016, while two and five-year bonds also hit similar highs.

NZ stocks held up well with fleet management company Eroad leading the local benchmark index higher. Eroad rose 6% to $3.85, the day after it was added to the ASX All Ordinaries Index – a list of the 500 largest Australian listed companies.

Shares of the Warehouse Group jumped 4.4% to $3.09 after it reported first-half profit down 8.2% with supply chain problems hurting margin.

Sales were down 4.3% during the six months reporting period, but were at a record during the second quarter.

KMD Brands, which operates Kathmandu, was unchanged at $1.33 ahead of its own half-year report tomorrow.

Forsyth Barr analysts expect a bottom-line loss and earnings to be in the range of $9m-to-$11m, but retain an ‘outperform’ rating on the retailer.

“As covid related restrictions subside we expect KMD will be able to demonstrate its enhanced quality following the acquisitions of Rip Curl and Obõz, progressing its strategy to be a global owner of brands,” they wrote in a note.

Meridian Energy had the day’s largest decline, falling 2.2% to $5.04, followed by Mainfreight which fell 1.7% to $79.01 and Pushpay Holdings which dropped the same amount to $1.16.

The NZ dollar was trading at 68.72 US cents at 3pm in Wellington, down slightly from 68.72 cents yesterday.

BNZ economists said the near-term headwinds for the currency were lower global growth expectations, heightened global risk due to the Russian invasion of Ukraine. and concerns around a weakening in the Chinese economy.

“On the flip side, the NZ dollar is being supported by very strong commodity prices which, in turn, continue to maintain a record high terms of trade,” they said.

The kiwi is likely to gain against the US dollar if a more stable environment emerges and reduces some of these headwinds.

Tags: Market Close

« NZ shares flat as market stabiliseF&P Healthcare sends NZX 50 lower as covid restrictions lift »

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AIA 5.35 4.49 5.25 5.55
ANZ 5.54 5.15 5.85 6.15
ANZ Blueprint to Build 2.78 - - -
ANZ Special - 4.55 5.25 5.55
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Avanti Finance 5.45 - - -
Basecorp Finance 6.45 - - -
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BNZ - Classic - 4.55 5.25 5.45
BNZ - Mortgage One 5.55 - - -
BNZ - Rapid Repay 5.55 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Std, FlyBuys 5.55 5.35 5.94 5.99
BNZ - TotalMoney 5.55 - - -
CFML Loans ▲6.45 - - -
China Construction Bank 5.50 5.40 6.14 6.40
China Construction Bank Special - 4.45 5.19 5.45
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First Credit Union Special 5.85 4.70 5.20 -
Heartland Bank - Online 4.00 3.85 4.70 4.84
Heretaunga Building Society 5.95 4.80 5.50 -
HSBC Premier 5.49 4.39 5.15 5.39
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 5.25 ▲4.29 ▲5.09 ▲5.35
Kainga Ora ▲5.43 ▲4.57 ▲5.58 ▲5.85
Kainga Ora - First Home Buyer Special - 2.25 - -
Kiwibank 5.00 5.55 6.19 6.39
Kiwibank - Offset 5.00 - - -
Kiwibank Special 5.00 4.55 5.19 5.39
Liberty 4.84 - - -
Nelson Building Society 5.95 4.95 5.85 -
Pepper Essential 3.44 - - -
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TSB Special 4.79 ▼4.34 5.25 5.35
Unity 5.65 ▲4.80 ▲5.50 -
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Westpac 5.54 5.09 5.79 6.09
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Westpac - Offset 5.54 - - -
Westpac Special - 4.49 5.19 5.49
Median 5.45 4.55 5.25 5.52

Last updated: 16 May 2022 9:03am

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