NZ shares near month low; dollar at 2-month low

New Zealand's headline share index fell half a percent as investors returned from the long weekend and sold shares ahead of inflation data that is expected to run hot this Thursday.

Tuesday, April 19th 2022, 6:12PM

by BusinessDesk

The S&P/NZX 50 Index fell 56 points, or 0.5%, to 11,835.88. Turnover was $130 million.

Tina Teng, an analyst at CMC Markets, said rising interest rates and high inflation were reducing investor confidence and the benchmark index was approaching a one-month low.

BNZ Bank expects Thursday’s consumer price index data to show annual inflation above 7%, up from 5.9% in the previous quarter.

Jason Wong, a BNZ strategist, said in a note this afternoon that investors' appetite for risk had fallen over the past week for both economic and geopolitical reasons.

“Firstly, the market worries about how high interest rates will need to go to bring inflation down, raising the question of what the impact will be on risk assets,” he said.

“Secondly, hope for a peace deal in Ukraine have almost completely faded and the odds have increased of a prolonged war, with negative implications for Europe and the global economy”.

Ryman Healthcare led the NZX 50 lower today, dropping 4.3% to $9.02. The stock has been sold off due to its relatively high levels of debt, but some analysts have said it is undervalued.

Pushpay Holdings fell 3.7% to $1.04 today, A2 Milk Company dropped 2.7% to $5.01, and Serko was down 2.6% at $4.55. All three are growth stocks facing sectoral challenges and not expanding as fast as investors had hoped.

The index’s largest stock, Fisher & Paykel Healthcare, also declined 3.4% to $22.26 today.

On the other side of the board, Skellerup Holdings rose 2.8% to $5.92 followed by Meridian Energy up 2.3% at $4.85.

DGL Group surged 12% to $4.18 after it said it upgraded its earnings guidance to $65m on sales revenue of $354 million for the 12 months to June 30.

“All three operating segments are performing strongly with increased activity due to market and seasonal factors,” said Simon Henry, DGL’s chief executive.

Shares in Kiwi Property Group were unchanged at $1.075 even after it increased its dividend guidance for 2022 to 5.6 cents per share, up 5.7% from 5.3 cents previously announced.

“While covid-19 has invariably caused disruption, we’ve come through omicron well so far, with rental growth, sales and income exceeding expectations,” said chief executive, Clive Mackenzie.

The NZ dollar fell to 67.32 US cents at 3pm in Wellington, from 68.19c before Easter as the American currency gained strength.

BNZ’s Wong said the NZ dollar had depreciated over the past week and was now at a seven-week low.

This was largely due to the weaker risk appetite, he said, with many concerned about the global monetary policy tightening cycle, China’s ailing economy, and seemingly less chance of a peace deal in Ukraine.

Tags: Market Close