5th day of falls on the sharemarket

New Zealand's headline share index fell for a fifth consecutive day as bond yields marched higher and electronic card spending was weaker than expected last month.

Tuesday, October 12th 2021, 7:03PM

by BusinessDesk

New Zealand's headline share index fell for a fifth consecutive day as bond yields marched higher and electronic card spending was weaker than expected last month.

The S&P/NZX 50 Index fell 23 points, or 0.2%, to 12,996.26. Turnover was $216 million.

Retail electronic card spending rose just 0.9% in September, down 14.9% from last year, disappointing those who had been hoping for a post-lockdown bounce.

“There are tentative signs that there may be less impetus in the consumption recovery from lockdown this time around,” said ASB senior economist Mark Smith.

The pervasive outbreak is keeping Auckland partially shut down and spreading into nearby regions meaning the retail recovery has been shallower than last time around, he said.

Most NZ stocks were weaker today, likely due to rising bond yields as many listed companies aren’t directly exposed to local discretionary spending.

The yield on a 10-year government bond climbed as high as 2.2%, while the 5-year bond hit 1.6% – both at year-long highs.

Rising energy prices are adding inflationary pressure which may encourage central bank hawks to look at tightening policy, contributing to higher bond yields.

Property stock prices are suffering as higher market interest rates negatively affect the economics of leveraged property investment. “The NZ listed property vehicle sector performance is closely linked to changes in long bond yields, as evidenced by the weak performance of the sector this month,” said Forsyth Barr analyst Rohan Koreman-Smit.

Goodman Property Trust units fell 1.2% to $2.42, Vital Health Property trust declined 1.2% to $3.01, and Investore Property dropped 0.5% to $1.95.

Not all were declining today, Kiwi Property Group was up 0.8% at $1.15 and Argosy Property climbed 1.3% to $1.60. Stride Property calling off its Fabric demerger will also have weighed on share prices in the sector, Koreman-Smit said. Shares in Z Energy edged towards the Ampol takeover bid price of $3.83, climbing 0.3% to $3.62 today.

Forsyth Barr analyst Andrew Harvey-Green said there was a potential upside for investors if another prospective buyer starts a bidding war but also a risk the deal could fail if Gull cannot be sold by Ampol.

“In our view, the most likely scenario is that the deal proceeds as proposed, with upside and downside scenarios equally balanced,” he said.

Shares in Westpac Bank fell 1.6% to $27.04 on news half-year profit would be A$1.3 billion less due to a write-down of goodwill, capitalised software, and other asset impairments from its institutional bank.

Air New Zealand has been awarded a further five months of support for cargo flights under an extension of a government subsidy scheme. Its shares climbed 0.9% to $1.65. The subsidy gives the airline support for approximately 65 flights per week until March which will contribute between $150 million and $170m towards cargo revenue.

My Food Bag fell to a new all-time low, trading at just $1.20 today, having climbed as high as $1.44 during the recent lowdown and listing at $1.85 in March.

The stock has now fallen more than 30% since it went public, although most analysts still value it above $1.80.

The NZ dollar fell against the Aussie dollar, trading at 94.39 cents from 94.83 cents yesterday, as commodity prices climbed, and the market speculated the Reserve Bank of Australia may raise interest rates.

Tags: Market Close