NZ sharemarket rocked by US inflation data
The New Zealand sharemarket bore the brunt of hotter-than-expected inflation data in the US that saw bond yields rise and more angst over the timing of any interest rate cuts.
Friday, April 26th 2024, 6:26PM
by BusinessDesk
The S&P/NZX 50 Index initially held up over the morning session but fell during the afternoon to close down 141.34 points, or 1.18%, at 11,805.
There were 93 decliners and 42 gainers over the whole market on volumes of 27.52 million share transactions worth $111.78m.
Harbour Asset Management portfolio manager Shane Solly said plenty of factors are in play with the local market taking its main reading from offshore news
. “We saw a busy night with slower US GDP growth and higher inflation raising question marks about whether the narrative of a robust, goldilocks-style US economy has run its course.”
International markets
Wall Street’s benchmark S&P 500 was down 0.5%, while the technology-heavy Nasdaq Composite closed 0.6% lower, with data showing the US economy grew much less than expected in the first quarter of 2024, at an annualised rate of 1.6%.
The data also showed that the Fed’s preferred metric of underlying inflation jumped to 3.7% from 2% in the final quarter of last year – exceeding forecasts of 3.4%.
That saw bond yields rise, which is typically negative for valuations.
The US inflation data followed Wednesday’s March quarter CPI in Australia, which increased 1% ahead of the 0.8% forecast and led commentators to highlight the potential for interest rates to increase across the Tasman.
Adding to the puzzle was the performance of some of the big US tech companies that reported after the market close – Google's parent Alphabet, Microsoft, and Amazon all beat expectations.
“The magnificent seven continue to drive the market along, so while the macroeconomics scene remains cloudy, in the meantime, these companies are beating expectations,” Solly said.
The Australian market was also weak, dragged down by the inflation situation and the materials sector, with BHP falling 4.4% after the mining giant revealed an A$60 billion (NZ$65.7b) bid for British copper play Anglo American.
Local market
Here at home, there was further weak economic data, with the ANZ-Roy Morgan NZ Consumer Confidence index down 4 points to 82.1, close to lows seen during the Global Financial Crisis, although still slightly above the more recent pandemic lows.
Ebos shares, down 3.34% to $34.30, and Spark, down 1.8% to $4.65, were notable decliners, and Solly noted those two, in particular, were susceptible to the half-yearly review of the MSCI Large Cap Index.
Air NZ fell 1.8% to 54.5c, Auckland International Airport was down 1.52% to $7.75, and Tourism Holdings fell 0.68% to $2.93.
Shares in property company Argosy were unchanged at $1.11 after it reported a full-year portfolio revaluation loss of $111.7m for the 12 months to March 31, a 5.4% decrease on the company’s book value.
Solly highlighted the reduction in Argosy’s industrial portfolio and large-format retail properties as an area of interest.
Other property stocks were also weak, with Stride down 2.31% at $1.27 and Property for Industry down 2.22% at $2.20.
Millennium & Copthorne Hotels fell 2c, or 1.05%, to $1.89. The company said it had entered into a conditional agreement to purchase land in Whangarei’s CBD for $2.24m.
Port of Tauranga shares gained 20c, or 4.09%, to $5.09. Solly noted speculation that Australian logistics firm Qube could look to NZ for its next big acquisition.
Fisher & Paykel Healthcare shares gave up some of their recent gains, falling 1.69% to $27.40. Competitor ResMed’s March quarter profit topped expectations.
The company operates in some of the same segments as F&P.
| « NZ sharemarket celebrates highest single-day rise in over five months | NZ sharemarket gains 1% thanks to F&P Healthcare » |
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