NZ shares fall; Air NZ shoots down merger talk

New Zealand's sharemarket lost further ground on Friday, having already suffered a significant fall on Wednesday when US inflation data was released.

Friday, September 16th 2022, 6:50PM

by BusinessDesk

The S&P/NZX 50 Index fell 78 points, or 0.7%, to 11,580.46. Turnover was $449 million, with the trading session extended for the quarterly rebalance of the S&P/NZX and FTSE Russell Indices.

The benchmark index’s minuscule gain yesterday gave way to decline today, and it finished the week lower than it closed on Wednesday.

Global interest rates have been moving higher since the US inflation data was released and were approaching 3.5% overnight as traders predicted a firmer central bank response.

“The prospect of more monetary tightening continues to weigh on risk assets, with equity markets and industrial commodity prices down again,” said BNZ strategist, Nick Smyth.

The US Federal Reserve will meet next week to reset interest rates and the market was pricing in a 20% chance of a “super-size” 100-basis-point hike.

Some local economists have also raised their expectations on where RBNZ’s official cash rate will peak after unexpectedly strong GDP data yesterday.

ASB Bank lifted its forecast to 4.25% and today ANZ Bank predicted an OCR peak of 4.75% – essentially at least two hikes above and beyond the 4.1% level the RBNZ has signalled.

Higher interest rates continue to create a headwind for listed equities, as does the slowing economy that comes with them.

Today, Restaurant Brands led the local share market lower with a 6% drop to $8.20 – giving back its sudden jump last Tuesday.

Other economically sensitive stocks also declined, such as the Warehouse Group which fell 4% to $3.60 and Mainfreight which dropped 3% to $72.50.

An Australian newspaper today reported the owner of Virgin Australia, Bain Capital, had held talks with Air NZ about a possible merger of the two airlines.

The national carrier shot down the rumour prior to the market opening but shares of the airline still rose 3.7% to 69.5 cents today.

Air NZ said it had “not been approached, and is not in discussions with any parties, regarding a potential merger transaction”.

Eroad, which has been tracking higher for the past 10 sessions, climbed another 3.6% to reach $1.75 today. The stock has gained more than 20% in recent weeks from record lows.

Last Friday, Jarden and Harbour Asset Management disclosed the two had amassed a more than 5% stake in the company.

Harbour individually owned just a 0.3% stake in Eroad, but has been expanding that position with an almost net $1.3m of purchases since December.

My Food Bag shares rose 4.7% to 67 cents. The meal-kit company’s chief executive Kevin Bowler announced he would resign next month.

Chair Tony Carter said Bowler successfully led the business through the pandemic and “virtually tripled its earnings”. My Food Bag said it will begin looking for a new CEO.

Pushpay Holdings finished the day unchanged at $1.10 after rumours that its takeover talks had failed sent the shares falling almost 11% yesterday.

The NZ dollar was trading at 59.59 US cents at 3pm in Wellington, down from 60.18 cents yesterday. The trade-weighted index was at 69.73 from 70.08 yesterday.

Tags: Market Close