NZ sharemarket tumbles half a percent

The New Zealand sharemarket tumbled nearly half a percent and defensive stocks were hit as wholesale interest rates crept up on further inflation concerns.

Tuesday, April 18th 2023, 6:30PM

by BusinessDesk

The S&P/NZX 50 Index fell at the opening and traded steadily to close at 11,884.1, down 52.04 points or 0.44%.

There were 60 gainers and 73 decliners on the main board, and volumes were again light with 26.88 million shares worth $91.79m changing hands.

Paul Robertshawe, chief investment officer with Octagon Asset Management, said the local market was softer than expected. “There’s not a lot of (company) news and the thin trading means some moves are over-exaggerated.

“The uptick in wholesale interest rates was noticeable and the defensive sector of property, retirement and utility stocks were hurt.”

The NZ 10 Year Government Bond yield increased 15 basis points to 4.26%.

Robertshawe said with the latest consumer price index out this week, it doesn’t feel like core inflation is falling as fast as people would like.

“Employment is full, wage demands are coming through and food prices are showing no signs of weakness. Interest rates may stay higher for a longer period.”

Retirement stocks had another down day, even though the housing market is showing signs of levelling out.

ANZ Research suggested that the bottom of the housing downturn may be reached earlier than its forecast of a 22% fall in house prices. Prices are now 16% below their November 2021 peak, after falling only 0.2% in March.

"If green shoots are emerging, the next big question is what this means for household demand, CPI inflation, and therefore interest rates. With inflation as high as it is, the Reserve Bank may not be willing to tolerate any signs of a turnaround in housing just yet,” the bank said.

In the retirement village sector, Summerset Group was down 18c or 2.17% to $8.10, a 32-month low after hitting a peak of $15.49 on August 30, 2021. Ryman Healthcare declined 9c to $5.31, and Oceania Healthcare shed 1c to 71c.

The dividend-paying energy and property stocks were marked down. Contact declined 7c to $7.65; Mercury shed 6.5c to $6.185; and Vector fell 12c or 2.94% to $3.96.

In the property sector, Vital Healthcare Trust was down 4.5c or 1.93% to $2.29; Argosy declined 2c to $1.115; Precinct decreased 2.5c or 1.94% to $1.265; and Kiwi shed 1.5c to 89c.

Market leader Fisher and Paykel Healthcare was down 42c to $26.53 following a strong run that saw its share price touch $27 earlier this month.

Robertshawe said Fisher and Paykel reports its latest financial result next month, “and if there was going to be an upgrade in earnings guidance, then we would have probably heard that by now. So, it looks as though the guidance remains the same.”

Freightways declined 10c to $9.21; Restaurant Brands decreased 21c or 3.14% to $6.48; Scales Corp was down 11c or 3.37% to $3.15; and Napier Port fell 22c or 7.97% to $2.54.

MHM Automation shed 2c or 2.06% to 95c; Green Cross Health fell 6c or 4.29% to $1.34; NZME was down 2c or 1.9% to $1.03; and Eroad declined 2c or 3.33% to 58c.

Auckland International Airport, down 4c to $8.62, told the market that March passenger volumes of 1.51m were 81% of the March 2019 pre-covid level, while February was 72% with 1.25m. International passengers were almost matching domestic travellers.

Gentrack was up 6c or 1.97% to $3.11; Heartland Group gained 3c or 1.89% to $1.62; and a2 Milk increased 20c or 3.22% to $6.42 on a broker’s report that demand in the Chinese market was moving along steadily.

Other gainers were Vulcan Steel up 10c to $8.45; Seeka increasing 7c or 2.49% to $2.88; T&G Global up 5c or 2.49% to $2.06; and Rakon adding 3c or 3.45% to 90c.

AFT Pharmaceuticals, up 5c to $3.50, has submitted additional information to the US Food and Drug Administration (FDA) for the registration of its intravenous pain relief medicine Maxigesic IV. The FDA wanted to know more about the performance of Maxigesic’s vial packaging.

Cancer diagnostics company Pacific Edge gained 0.05c to 46c after reporting that test volumes increased 14% to a record 8,878 in the fourth quarter compared with the previous quarter.

The volumes were 42% ahead of the tests in the same period last year, and the full-year total is 31,556, up 37% on the previous year.

NZ Rural Land Company, up 1c to 92c, has completed the purchase of a 2,400-ha forestry estate in the Manawatu-Whanganui region for $63m. The estate has been leased to NZ Forest Leasing for a 20-year term, with the first year’s payment being $5m.

Tags: Market Close