Cautious trading follows week of share market turmoil

New Zealand’s benchmark index had a slightly subdued end of the week after yesterday’s US Federal Reserve’s largest interest rate increase in almost 30 years made investors take flight at the prospect of future hikes.

Friday, June 17th 2022, 6:11PM

by BusinessDesk

It’s been a rocky week overall for NZ shares because earlier in the week the index sank 2.6% before picking up some ground on Wednesday and finding a skip in its step yesterday.

It struggled to retain that sparkle this morning as the S&P/NZX 50 dropped almost 2% in its first hour of trading. But it slowly regained the lost ground over the course of the day and ended the week down by just half a point.

The S&P/NZX 50 Index fell 57.3 points, or 0.54%, to 10,589.19. Turnover was extremely high at $439.7 million, thanks to the index resettlement at the end of the day.

Yesterday, the US Federal Reserve announced the largest interest rate increase since 1994 – with the warning that the Fed was going to continue to raise rates through next year. This sent investors scrambling.

ASB economist Nathaniel Keall said it was “ugly” for financial markets overnight as global share markets faced heavy losses.

He said this morning the Dow was down 2.6%, the S&P500 down 3.5% and the Nasdaq was sitting at a loss of 4.4%.

Peter McIntyre, an investment adviser at Craigs Investment Partners, said NZ’s market had been “reliably well-behaved over the course of the day with very cautious trading”.

He said utilities were the big gainers of the day, with electricity company Genesis also giving other utility stocks a boost.

Genesis Energy was up 5.4% to $2.56, and Manawa Energy was up 1% to $6.11. Contact Energy also rose 0.56% to $7.14.

However, Meridian was down 2.7% to $4.36.

McIntyre said rest-home operator Ryman Healthcare was one of the big beneficiaries of the index resettlement in terms of volume, and its shares were up 3.6% to $9.05 at the end of the day.

ANZ Bank was down 1.8% to $23.56 today. Westpac was also down 3.2% to $21.10 and Heartland Group down 2.1% to $1.87.

ANZ Bank announced today that it had confirmed Amanda Owen as its chief financial officer, a role she has been acting in since July 2021.

McIntyre said banking stocks were “weak” today, even though banks typically did well off rising interest rates.

He said investors would be worried because interest rates were moving up and the housing market was slowing down.

Medicinal cannabis company Cannasouth jumped to the top of the board this afternoon, up 9% to 36 cents. Cannasouth was NZ's first medicinal cannabis company to list on the NZ Stock Exchange, back in June 2019.

NZME shares fell 2.6% to $1.14. The media group announced earlier today that it had won radio broadcast rights for both the 2022 Commonwealth Games and 2024 Olympics, following the company’s plan to bolster its sports coverage.

Gold AM is being rebranded to Gold Sport from June 27, as part of NZME’s drive to grow its sports coverage.

Tourism Holdings had the biggest fall of the day, dropping 7.1% to $2.34. Chemical manufacturing company DGL Group was also down 6.6% to $2.71, and Metro Performance Glass fell 6.5% to 21 cents.

The kiwi dollar was trading at 63.44 US cents by 3pm in Wellington, up from 62.37 cents yesterday. The trade-weighted index was at 71.28, from 70.53 yesterday.

Tags: Market Close