NZ shares seesaw and investors buy bonds

New Zealand's sharemarket rally stalled today as investors, particularly in Europe, sold stocks and bought government bonds

Wednesday, March 2nd 2022, 6:37PM

by BusinessDesk

The S&P/NZX 50 Index fell 110 points, or 0.9%, to 12,088.75. Turnover was $165 million.

Michael McCarthy, chief strategy officer at Tiger Brokers Australia, said investors were reacting to the uncertainty created by the conflict between Russia and Ukraine.

The disruption within the two commodity-producing nations will add to inflationary pressures and sanctions are likely to slow European growth.

“Despite these obvious pressures, some investors are clinging to hopes that the outbreak of war will see central banks maintain lower rates for longer,” McCarthy said.

Both US and NZ bond yields fell in the past 24 hours, he said, and the conflicting views on interest rates are causing share prices to seesaw.

Ryman Healthcare led the local share market decline, as it fell 4.8% to $9.55. The stock has been unpopular as interest rates have climbed, with the company carrying a lot of debt.

Fonterra Shareholders' Fund Units declined 4% to $3.31 after the global dairy trade auction overnight fetched yet another record price, with the Ukraine crisis putting pressure on an already short supply of milk.

“Rabobank anticipates more upside to come for global prices of grain, oil, natural gas and fertiliser over time. The flip side is that we also expect the same for food prices and inflation,” said agricultural analyst Emma Higgins.

Auckland International Airport dropped 3.5% to $7.10 and ANZ Bank fell 3% to $27.51.

My Food Bag Group – which is considered sensitive to inflation – fell to a new low at 96 cents, down 3%.

Meanwhile, oil-related stocks outperformed the market: shares in NZ Refining rose 3% to $1.02 – it has climbed more than 5% in the past month – and NZ Oil & Gas was up 2.9% at 53 cents, up 10% since January.

Fuel retailer, Z Energy, was unchanged at $3.64. Higher fuel prices tend to result in lower sales for the company, particularly with low-cost competitors like Gull now prevalent.

McCarthy said energy stocks were “a rare bright spot in the near term” as sanctions on Russian gas exports lift prices across the board.

Brent crude oil rose above US$100 a barrel and was traded almost 10% higher today, he said.

Investors were unperturbed by the Commerce Commission asking for an extension while considering Tourism Holdings’ acquisition of Apollo Tourism & Leisure – shares in the company rose 0.4% to $2.58.

The NZ dollar continued to hold its level, stuck in a limbo between high commodity prices and investors’ current aversion towards riskier currencies.

It was trading at 67.65 US cents at 3pm in Wellington, little changed from 67.62 cents yesterday.

Tags: Market Close