New Zealand’s S&P/NZX 50 index joined the global decline as elevated oil prices fuelled fears of mounting consumer inflation ahead of official US figures later this week that are expected to make the case for or against a rate hike by the Federal Reserve. 

Declines on the NZX 50 were widespread with virtually no sector left unscathed, while companies shedding rights to upcoming dividends such as Sky Network Television and Spark New Zealand were at the bottom of the leaderboard.

Outside the benchmark index, Bremworth advanced after the carpetmaker’s independent directors resigned, clearing the decks for David Ferrier if his partial takeover is successful, while General Capital jumped after its finance unit grew its loan book in the June quarter.

And the Financial Markets Authority’s annual KiwiSaver report showed average balances climbed above $40,000 for the first time.

Slippery slope

The NZX 50 dropped 108.42 points, or 0.8%, to 13,711.01, with 43 stocks falling, four rising and three unchanged. The S&P/NZX 20 index futures contract for September fell 0.4% to 7,625, with 1,570 lots traded for a value of $11.9 million, while the NZX 20 sank 1% to 7,615.

Turnover across the main board was $142.3 million, of which Fisher & Paykel Healthcare accounted for $20.7 million as it edged up 0.1% to $43.95.

Stock markets across Asia followed Wall Street lower, with Brent crude oil futures dipping 0.1% to remain elevated at US$101.09 a barrel. Australia’s S&P/ASX 200 index sank 1.4% in late trading, while Hong Kong’s Hang Seng dropped 1.3% and Japan’s Nikkei 225 dipped 0.3%.

Rising petrol prices are seen as a potential headwind for central bankers, who might need to hike interest rates to rein in rising consumer prices. The yield on New Zealand’s government bond rose 8 basis points to 4.88% at 5pm in Auckland, while the US equivalent increased 5 points to 4.85%.

US producer price inflation data on Thursday and consumer price data on Friday are seen as key inputs for the Fed’s decision next week. In the meantime, bond traders predict the European Central Bank will raise its key rate overnight.

“The futures curve for the Fed has moved 30 basis points across the board,” said Jeremy Sullivan, an investment adviser at Craigs Investment Partners. “Broadly, inflation is building into US wholesale rates, and the Fed might have to act.”

Cashing in

Sky TV posted the steepest decline on the day, falling 6.2%, or 23 cents, to $3.51 after shedding rights to an upcoming payment of 17 cents per share, while Spark slipped 3.7%, or 8 cents, to $2.08, going ex-dividend on an 8 cents per share payment.

Freightways also went ex-div, falling 3%, or 40 cents, to $12.75 ahead of a 24 cents per share payment. Separately, ANZ’s monthly Truckometer gauge of heavy and light vehicle movements showed both measures dipping in August.

Sharon Zollner, ANZ New Zealand chief economist, said the light traffic gauge was noticeably lower in recent months, reflecting reduced discretionary spending on the likes of tradespeople and couriers, while the more volatile heavy traffic index may have been hindered by winter storms.

Move Logistics, which is outside the benchmark index, rose 1.7%, or 0.3 of a cent, to 18.3 cents, while global logistics group Mainfreight slipped 1.4% to $65.60.

Vulcan Steel posted the biggest gain on the NZX 50, up 1.6% at $6.30, while Napier Port Holdings increased 0.6% to $3.60 and Argosy Property rose 0.5% to $1.015.

Outside the NZX 50, Bremworth advanced 2.9% to 72 cents after the carpetmaker’s three independent directors resigned after major shareholders made it clear that they weren’t interested in a new offer from Godfrey Hirst’s parent, putting Ferrier’s partial takeover offer at 90 cents per share in the box seat.

General Capital jumped 9.4% to 29 cents in the biggest gain on the main board after the financial services firm’s non-bank deposit taking subsidiary reported a June quarter profit and grew its loan book.

Among other companies shedding rights to upcoming dividends, PGG Wrightson fell 1.8%, or 4 cents, to $2.20 ahead of a 5.5 cents per share return, NZME declined 3.6%, or 4 cents, to $1.07, ahead of a 3 cents per share payment, and Solution Dynamics decreased 2.4%, or 1.5 cents, ahead of a 2 cents per share dividend.

And the FMA’s annual KiwiSaver report today showed the average member balance rose 11% to $40,340 in the March year, with funds under management growing 13% to $138.8 billion.

Reporting by Paul McBeth.