Shares fall as global investors wait for US jobs data

New Zealand shares gave up a short-lived rally on Friday, falling ahead of the release of important employment data over the weekend.

Friday, October 7th 2022, 6:06PM

by BusinessDesk

The S&P/NZX 50 Index fell 21.45 points, or 0.19%, to 11,103.79. Turnover was low at just $98 million.

The benchmark index had gained as much as 1% this week, but after falling today finished the week up just 0.2%.

Market traders became nervous over the past 24 hours, said SPI Asset Management’s Stephen Innes, as they positioned ahead of a key US employment report due overnight.

The NZ dollar gained marginally against the US dollar today and finished the week up 1% at roughly 56.66 US cents.

It had been trading much higher earlier in the week, however, breaking above 58 US cents on Thursday. The kiwi followed a similar pattern on other key crosses.

An S&P Global Ratings report, published today, warned there was no obvious catalyst to reverse the US dollar’s ascent.

"We appear to be entering the third dollar boom period in the past 50 years," said global chief economist, Paul Gruenwald.

For both advanced and emerging economies, he said, the dollar's strength creates problems such as higher inflation and possibly higher rates.

"There is no easy solution: passivity endangers inflation targets and credibility, rate rises risk lower output and employment, intervention is likely to burn through precious reserves," he said.

Precinct Properties led the NZ share market lower, falling 2.29% to $1.28, having jumped yesterday when it was announced as the preferred choice to develop a downtown car park owned by Auckland Council.

The property developer was up as much as 4% yesterday but gave back most of that gain during trading today.

Kiwi Property Group also declined 2.6% to 91.5 cents, likely influenced by the fluctuations in Precinct’s share price. Argosy rose 4.2% to $1.24 – the company has been gaining since it gave an update on Sept 30.

Synlait Milk fell 3.1% to $3.39 today, having gained 4.6% in the past three months. Its key customer, A2 Milk Company, climbed 1.6% to $6.27.

NZX-listed cannabis companies jumped today after US president Joe Biden began to overhaul the federal government’s policy on marijuana.

Reuters reported he pardoned thousands of people with federal offences for simple marijuana possession and set up a review of how the drug is classified.

This has been received as a step towards wider legalisation and sent cannabis stocks around the world higher.

Rua Bioscience jumped 8.7% to 25 cents and Cannasouth leapt 6.45% to 33 cents. These stocks have all fallen at least 10% in the past three months.

Devon Funds head of retail Greg Smith said those stocks were definitely benefiting from the news overnight. If America fully decriminalised the drug, it had the potential to create opportunities for the companies in New Zealand.

“It would open up new markets aside from the medicinal market,” he told BusinessDesk.

Tags: Market Close