NZ shares stabilise as US Fed meets

New Zealand shares found a steady footing on Wednesday after two days of dramatic declines and ahead of central bankers in the United States meeting to decide rate increases.

Wednesday, June 15th 2022, 6:05PM

by BusinessDesk

The S&P/NZX 50 Index fell just 5 points, effectively 0%, to 10,635.92. Turnover was below average at $125.6 million.

Bond yields across the curve continued to find new highs, with the NZ 2-year government bond now at its highest level since 2009 and on track to joining the 10-year and 5-year above 4%.

This upward move follows a global trend after hot US inflation data released on Friday has caused investors to bet the US Federal Reserve will hike interest rates by 75 basis points.

BNZ Research said there was now “a good chance” the Reserve Bank of NZ would do the same when it meets next month.

Investors are waiting to see what happens at the Fed meeting overnight, having already rushed to sell stocks early this week expecting the bankers would emerge with an aggressive rate hike.

Higher interest rates have not just been hitting stocks, but also the kiwi dollar, which has fallen more than 3.4% in five days and touched a 2-year low at 62 US cents.

It was trading at 62.37 US cents by 3pm in Wellington, down from 62.59 cents yesterday. The trade-weighted index was at 70.53, from 70.82 yesterday.

Despite the benchmark equity index staying steady, there were some significant falls among the stocks within it.

Manawa Energy had the biggest fall, dropping 4% to $6.05, while Vista Group and Tourism Holdings each fell 3% to $1.55 and $2.55, respectively.

Ryman Healthcare declined 2.9% to $8.40, Fletcher Building was down 2.8% at $4.80, and Pacific Edge was off 2.8% at 70 cents.

On the other hand, fruit exporter Scales Corporation climbed 4.8% to $4.40 – likely benefiting from the weaker local currency.

Global logistics firm Mainfreight also rose 2.3% to $71.80 and Air NZ was up 0.9% at 55.5 cents. Spark NZ, which fell in recent days but is generally considered defensive, climbed 2.4% to $4.64.

Tags: Market Close