by Paul McBeth
Air New Zealand crashed to all-time lows in a week when the national carrier led the S&P/NZX 50 index to its steepest weekly decline in 18 months, as surging jet fuel prices prompt airlines around the world to cancel flights as their margins get squeezed.
The local benchmark dipped on Friday in a mixed session across Asia, with trade-exposed firms such as Mainfreight, Port of Tauranga and Napier Port Holdings among those dragging the NZX50 lower as Brent crude oil futures crept back above US$100 a barrel.
Meanwhile, economic bellwether Freightways declined as several bank economists gave a soggy forecast for Statistics New Zealand’s December quarter gross domestic product figures, predating the disruption caused by the Middle East conflict.
And Channel Infrastructure clawed back earlier losses to post the biggest gain on the NZX50 on Friday as nations jostled to shore up their fuel supply, with the US relaxing sanctions on Russian oil production, China telling oil refiners to halt all fuel exports, Australia loosening fuel quality standards and Vietnam, Thailand and the Philippines among countries limiting fuel use.
Sharp and short?
The NZX50 dipped 11.95 points, or 0.1%, to 13,187.34 on Friday, with 22 stocks declining, 21 gaining and seven unchanged. Turnover across the main board was $141.8 million, of which Fisher & Paykel Healthcare accounted for $17.5 million, as it nudged up 0.1% to $38.94.
That took the benchmark index’s weekly decline to almost 2.5%, its steepest drop since September 2024, in a week when Air New Zealand plummeted as low as 44.5 cents – a record on an adjusted basis – and shed 12% to end Friday at 45 cents.
The national carrier had its worst week since May 2022 as one of the hardest hit local companies by the surging oil price, with jet fuel rising at a faster pace than raw crude and forcing the airline to cancel flights and hike airfares in an attempt to manage the margin squeeze.
Air NZ hasn’t been alone in that response, with US carriers raising airfares and Malaysia Airlines, Qatar Airways, Air France, Thai Airways and Cathay Pacific among others considering suspending flights.
Fishing group Sanford, which counts oil as a major cost for its fleet, dropped 5% in the week to close Friday at $7.26, while global logistics firm Mainfreight fell 4.7% to $60.50.
Meanwhile, travel software firm Serko snapped five weekly declines to rise 5.8%, ending Friday at $2.02 after a briefing for investors gave them heart the company would be able to navigate the threat posed by artificial intelligence to its business mode.
The rising oil price – Brent crude oil futures were up 0.1% at US$100.54 a barrel at 5pm in Auckland – has posed a new headache for central banks by reigniting fears that recently tamed inflation will rear its head again, with bond traders fully pricing in a 25 basis point rate hike by the Reserve Bank for the September meeting.
“Conflict in the Middle East has continued over the week, with each day it continues representing more upside risk to our near-term inflation forecast and more of a threat to New Zealand’s nascent economic recovery,” ANZ New Zealand economists said in a note. “The conflict has now moved beyond a short-lived geopolitical shock and into a phase where oil supply losses are increasingly at risk of becoming more persistent.”
Competing tensions
That inflationary impulse on the supply side will run up against dwindling demand sapping economic growth, raising the threat of a stagflationary environment.
The kiwi dollar fell to 58.45 US cents at 5pm in Auckland from 59.05 cents yesterday, and was on track for a 1.2% weekly decline.
Economists at ANZ, Bank of New Zealand and Kiwibank have a softer outlook for December quarter GDP figures due next week, while the BNZ-BusinessNZ performance of manufacturing index for February and January travel and migration figures were relatively upbeat in the period before the Middle East conflict sparked.
Courier operator Freightways – often seen as an economic bellwether – led the NZX50 lower on Friday as it fell 2.9% to $13. Mainfreight declined 1.6% on Friday, while Napier Port slipped 2.5% to $3.55 and Port of Tauranga decreased 0.9% to $7.87.
Air NZ was the most heavily traded stock on the day with a volume of 4.3 million shares changing hands as the price dipped 1.1%.
Electricity generator-retailers were mixed as Contact Energy fell 1.2% to $9.19 and Genesis Energy was unchanged at $2.16, while Mercury NZ increased 0.6% to $6.34 and Meridian Energy advanced 0.2% to $5.35.
Channel Infrastructure posted the biggest gain on the day, rising 4% to $2.86. The import terminal operator recovered losses earlier in the week as nations responded to the release of strategic oil reserves and other measures to settle oil prices.
Outside the benchmark index, Taiko Critical Minerals extended its trading halt until Tuesday as it continues to discuss its financial model statement on Wednesday with market supervisor NZ RegCo.
Metro Performance Glass, having recently completed a share consolidation, dipped 0.8% to $1.20 after trimming earnings expectations for the March year.
Paul is a staff writer for Good Returns based in Wellington.
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