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Inflation sends shares sliding

New Zealand's benchmark share index fell on Tuesday as investors worried about inflation ahead of the Reserve Bank of NZ’s monetary policy decision tomorrow.

Tuesday, April 12th 2022, 6:27PM

by BusinessDesk

The S&P/NZX 50 Index fell 42 points, or 0.4%, to 11,889.17. Turnover was $171 million.

Greg Smith, head of retail at Devon Funds, said the technology sector was bearing the brunt of the decline as investors rotated away from interest rate sensitive growth stocks.

“While the war has continued in the Ukraine without any real sign of progress on ceasefire negotiations, investor eyes are very much on the two “i’s” – inflation and interest rates,” he said.

Shares in Eroad plunged another 10.4% to $3.18 as the stock continued to struggle after its chief executive suddenly resigned last week.

Other growth stocks also saw sharp falls: Serko dropped 5% to $4.75, A2 Milk fell 4.4% to $5.01, and Vista Group declined 2.7% to $1.78.

Jason Wong, an interest rate strategist at BNZ, said interest rates around the world had been moving higher as traders priced in inflation risk. 

“The new week has got off to a bad start, with global rates pushing higher as if they haven’t risen enough,” he said.

The yield on a 10-year government bond was today trading above 3.5% for the first time since 2015.

Wong said shorter dated rates would likely be constrained as the terminal official cash rate is already priced above 4%, higher than RBNZ has signalled.

Lockdown in China is also spooking investors as Shanghai ports get more congested with trucking shortages and warehouse closures.

“This impact is, and will continue to, ripple through the global supply chain, adding to delays and inflationary pressures,” Wong said.

Mainfreight has benefitted from logistics disruption previously and its share price climbed 1.8% to $81.51.

Cyclical stocks, Ebos Group and Skellerup Holdings both rose 4% to $41.89 and $5.82, respectively.

NZME shares climbed 2.3% to $1.75 after it held its annual general meeting online, avoiding a confrontation from a cohort hoping to challenge it on its advertising policy after the media company declined to run an advert from a gender issues group.

Shares in Z Energy rose half a percent to $3.76 after the Overseas Investment Office gave Ampol the go ahead to acquire the fuel retailer.

Ampol also announced it would take up a foreign exempt listing on the NZX, softening the loss for the local exchange.

The NZ dollar was trading at 68.2 US cents at 3pm in Wellington, down from 68.24 cents yesterday.

During the next few weeks, the US dollar could rise further, boosted by both risk-averse sentiment in asset markets, and expectations of higher interest rates. US CPI inflation data this week and the Fed meeting on 4 May have the potential to be catalysts.

Imre Speizer, Westpac’s head of NZ strategy, said the US dollar could rise further in the next few weeks, boosted by both risk-averse sentiment in asset markets and expectations of higher interest rates.

He said US consumer price inflation data this week and the Federal Reserve meeting on May 4 have the potential to be catalysts.

“Against that, the RBNZ’s MPR on April 13 poses risks in both directions – a 25bp hike would cause a NZD decline, while a 50bp hike could do the opposite,” he said.

Tags: Market Close

« NZ shares fall on interest rate riskDouble trouble for markets as RBNZ hikes rates »

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Lender Flt 1yr 2yr 3yr
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
ASB Bank 5.35 4.49 5.25 5.55
Avanti Finance 5.45 - - -
Basecorp Finance 6.45 - - -
Bluestone 5.29 7.49 7.59 -
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
Credit Union Auckland 5.95 - - -
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 - - -
Resimac 4.59 5.60 6.16 6.29
Lender Flt 1yr 2yr 3yr
SBS Bank 5.29 4.69 5.35 5.49
SBS Bank Special - 4.19 4.85 4.99
Select Home Loans 4.09 4.29 4.86 5.09
The Co-operative Bank - First Home Special - ▲4.19 - -
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The Co-operative Bank - Standard 5.45 ▲4.79 5.69 5.95
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TSB Special 4.79 4.34 ▼4.99 5.35
Unity 5.65 4.80 5.50 -
Wairarapa Building Society 5.24 4.55 5.20 -
Westpac 5.54 5.09 5.79 6.09
Lender Flt 1yr 2yr 3yr
Westpac - Offset 5.54 - - -
Westpac Special - 4.49 5.19 5.49
Median 5.45 4.55 5.25 5.52

Last updated: 19 May 2022 10:42am

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