NZ sharemarket fall reflects worried investors

The New Zealand sharemarket gave back more than half of the previous day’s gains as investors once again worried about the future path of interest rates and the slowing economy.

Wednesday, January 10th 2024, 6:17PM

by BusinessDesk

The S&P/NZX 50 Index fell at the opening after a mixed day on Wall Street and then slid further to close at 11,769.4, down 74.99 points or 0.63% after gaining 0.93% the day before.

Trading was quiet, with 16.48 million shares worth $49.98m changing hands, and there were 40 gainers and 75 decliners over the whole market.

Shane Solly, portfolio manager with Harbour Asset Management, said the market has slipped back into a choppy, volatile mode.

“Investors are uncertain and worried about getting stung by the prospect of interest rates going back up and corporate earnings coming in lower than expected,” he said.

“People are waiting to see what the next round of inflation data looks like, and the markets in the US have unwound the expectation of six rate cuts this year.

“It’s a bit of a reality check for the markets, which is a good thing. They were getting a bit overdone with the end-of-year rally,” Solly said.

Investors in the US are bracing this week for the consumer price and producer price indices and the start of the latest corporate earnings reporting season.

The US 10 Year Treasury Note yield was slightly ahead at 4.02%, and the NZ 10 Year Government Bond yield increased 6.1 basis points to 4.63%.

Annual growth in total spending

There was mixed news on the economic front. Annual growth in total spending eased to 2.5% from 2.6%, with durables and clothing remaining weak and utilities and miscellaneous spending growing faster than other categories.

ANZ Research said spending last month on car rentals was considerably stronger than the previous December and there was double-digit growth at tourist attractions, but spending at travel agencies and tour operators continues to fall.

The ANZ World Commodity Price Index increased 2.4% in December, ending the full year down 1.8%. In NZ dollar terms, the index lifted 1.9% compared with November as the dollar gained 2.4% against the trade-weighted index.

Dairy prices improved, especially for butter, cheese and whole milk powder, to drive the index higher, more than offsetting weaker aluminium prices. Global shipping prices are once more trending higher, eroding exporters’ margins.

ANZ said in-market pricing in China for logs is improving as tighter supplies are generating greater urgency from buyers. Local DIY activity has picked up but building consents remain low, signalling slow overall demand in the months ahead, the bank said.

The meat and fibre index gained 0.6% in December, but beef prices are under downward pressure due to strong global supply.

The horticulture index was stable in December, with improved kiwifruit returns to growers due to better in-market prices and improved fruit quality.

Weaker energy stocks

At home, interest rate-sensitive energy stocks were weaker, with Meridian down 7c to $5.64, Mercury falling 16c or 2.38% to $6.55, Contact decreasing 9c to $8, and Vector declining 5c to $3.74.

Fisher and Paykel Healthcare was down 36c to $23.74; Ebos Group declined 84c or 2.3% to $35.71; Turners Automotive decreased 9c or 1.97% to $4.48; Freightways gave up 22c or 2.55% to $8.40; and kiwifruit grower Seeka shed 10c or 3.7% to $2.60.

Amongst the retirement village stocks, Ryman Healthcare increased 10c to $5.85; Summerset Group declined 9c to $10.77; and Oceania Healthcare was down 2c or 2.6% to 75c.

Other decliners were Winton Land falling 10c or 3.57% to $2.70; Vulcan Steel down 17c or 2.07% to $8.06; Hallenstein Glasson decreasing 12c or 2.18% to $5.38; Investore shedding 3c or 2.48% to $1.18; and Precinct Properties down 3.5c or 2.71% to $1.255.

Port of Tauranga was up 10c or 1.82% to 5.60; Napier Port collected 7c or 2.92% to $2.47; Vista Group improved 4c or 2.5% to $1.64; Eroad added 2c or 2.22% to 92c; and 2 Cheap Cars gained 2c or 2.5% to 82c.

Tags: Market Close