NZ shares had a bad hangover after a rough night globally

International markets had a bad night which meant most stocks on New Zealand’s benchmark index got out of the wrong side of the bed when early trading opened this morning and went downhill from there.

Friday, May 6th 2022, 7:06PM

by BusinessDesk

In the US, the Dow Jones Industrial Average declined 3.1% to a 26-month low while the tech-heavy Nasdaq plummeted 5% to its lowest level since November 2020.

The S&P/NZX 50 index sank 138.1 points, or 1.2%, to 11,609.38. Within the broader equity market, an eye-watering 120 stocks fell and only 22 rose.

Turnover was $141.3 million. Going into the weekend, the Federal Reserve’s 50 basis point hike continues to make massive waves through the markets.

Peter McIntyre, an investment adviser at Craigs Investment Partners, said that the weakness in equity markets followed US economic data suggesting the Federal Reserve was concerned that inflation was getting “somewhat out of control”.

“That's been a key concern for markets overall and the potential for stagflation coming onto the table as well,” he said.

ASB senior economist Chris Tennent-Brown wrote in a monthly update this afternoon that NZ’s consumer price index (CPI) inflation was running at the highest rate in more than 30 years at 6.9%.

Tennent-Brown said ASB economists feared that it could push above 7%.

“Tradable or internationally set prices for things like airfares and shipping, as well as supply chain frictions, are continuing to boost prices,” he said.

Of the 120 stocks that ended the day down, NZ Oil & Gas was the largest stock with the biggest decline, down 7.2% to 45 cents.

Childcare business Evolve Education Group had the most fortuitous day as it led the top of the index up 8.5% to 76 cents per share.

Healthcare and animal care products wholesaler Ebos Group was the biggest stock that woke up on the wrong side of the bed, falling 2% to $41.53.

The stock price ended the day down 1.4% to $41.80.

Tech stocks being slammed

One sector which won’t be going into the weekend with a positive outlook was tech, with many tech stocks being slammed by the flow-through from Nasdaq’s overnight nosedive.

NZ’s largest telecommunications and digital services company Spark dropped 1.8% to $4.89 while other tech stocks like Scott Technology were down 2.3% to $2.92.

Dairy didn’t have a fantastic day either with Fonterra Shareholders' Fund Unit down 3.4% to $2.84, A2 Milk Company falling 0.64% to $4.67 and Synlait Milk dropping 2.3% to $3.36.

Earlier today, ANZ Bank lowered its farmgate milk price forecast for this season and the next as dairy commodity prices slump.

This came after prices fell for the fourth consecutive time, this time to 8.5% in the Global Dairy Trade auction earlier this week.

ANZ has lowered its 2021-22 season forecast by 40 cents to $9.30 per kilogram of milk solids – around $500m less for the rural sector than it previously expected.

ANZ rose 0.24% to $29.70 today. Westpac fell 0.87% to $26.26 after the bank said it expected house prices to drop by 15% thanks to the rise in mortgage rates.

National carrier Air NZ fell 1.8% to 80 cents, and Auckland Airport dropped 1.7% to $7.75.

It was also another negative day for chemical processing and logistics company DGL, which was down 4.9% to $3.85 again following the racist and misogynistic comments chief executive Simon Henry made about My Food Bag co-founder Nadia Lim.

Yesterday, KiwiSaver provider Kiwi Wealth said it wouldn’t invest in the logistics firm and today and this afternoon investment company Devon Funds followed suit and added the company to its excluded list.

Victoria Harris, a Portfolio Manager at Devon Funds, said she was “appalled” by Henry’s comments.

“Putting a company on an exclusions list is our way of saying we do not condone or support these racist and sexist comments,” she said.

Lucky for some The stocks that didn’t have a hard time were few and far between today but 22 stocks managed to rise and will be going into the weekend relieved they made it through on a good note today.

Healthcare manufacturer Fisher & Paykel Healthcare was the biggest stock that edged up today, rising by 2.1% to $21.95 The NZ dollar was trading at 64.15 US cents at 3pm in Wellington, down from 64.46 cents yesterday.

Tags: Market Close