Financial markets hate tariffs: NZX 50 down 0.5%

The New Zealand sharemarket's benchmark index fell for its third consecutive day as signals from across the Pacific show the trade war between the United States and its largest trading partners is heating up.

Wednesday, March 5th 2025, 6:57PM

by BusinessDesk

The S&P/NZX 50 Index closed at 12,412.07, down 57.64 points or 0.46% on Wednesday. Across the whole market, 48 shares gained and 92 declined with 36.8 million shares worth $172.1m changing hands.

Matthew Goodson, director and portfolio manager at Salt Funds, said markets are finding it hard to ignore the volatility brought on by trade policy flip-flopping in the White House.

“Financial markets hate tariffs. Many people would regard them as economic sabotage,” he said. "They mean higher prices and lower output on a global basis, and that is bad news for equities."

Escalate to escalate some more

In response to US President Donald Trump’s tariff announcements on Monday, Beijing responded with duties of 10% to 15% on US agricultural products.

Canada and Mexico also declared their intentions to impose levies on US imports after Washington imposed 25% tariffs on its two neighbours.

The S&P 500 closed down 1.2% on Tuesday, erasing all the gains from a bullish run after Trump’s election on Nov 5. The tech-heavy Nasdaq index dropped 0.4%.

Goodson said that volatility is impacting NZ markets as well because it spooks investors out of equities everywhere.

“Retail investors hold a little more cash. Hedge funds take their position size down, et cetera, et cetera,” he said.

“It lifts the risk premium in equities when you're going to get blown around by the latest unforecastable headline that emanates out of the Trump administration. That is really the key takeaway from this.”

Auckland International Airport declined 2.66% to $8.05; Fletcher Building decreased 2.07% to $3.31; and Meridian was down 3.81% to $5.55, while fellow gentailer Contact Energy shed 0.97% to $9.20.

Mainfreight, which has direct exposure to the US market, was down 2.28% to $68.

Goodson said one notable counterexample was Fisher & Paykel Healthcare, which rose 3.52% to $34.68 despite being acutely affected by tariffs in Mexico. The stock is still down nearly 9% in the year-to-date.

Retirement and property

While the NZX was quiet on the announcement front after a busy reporting season, there was at least one update that surprised investors on the upside.

Oceania was up 4.69% to 67 cents after telling the market it had refinanced its debt and posted a trading update. The retirement village and aged care company said new unit sales grew 29% in the third quarter compared to the same period last year, while resales grew 6%.

Stephen Ridgewell, head of research at Craigs Investment Partners, also highlighted that Oceania had reached 34% occupancy at its flagship Auckland development, The Helier.

“They've got a way to go,” Ridgewell said. “But I think the pickup and cadence is really encouraging.”

The other two large, listed retirement companies, Summerset and Ryman Healthcare, were heavily traded with values amounting to $10.6 million and $13.2m, respectively.

Summerset was down 2.04% to $12.03 after its full-year earnings on Friday helped assuage fears of a severe sales slowdown.

Ryman, which lost 0.99% to $3, is now trading five cents below the price offered to investors for the company's equity raise that is currently taking place.

Precinct Properties shares rose 1.71% to $1.19 after it announced a conditional agreement to sell the hotel at One Queen Street in Auckland for $180m.

Goodson said the market reaction was “accurate” because the hotel “sold for a decent price”.

Other gainers included a2 Milk Company, which was up 1.49% to $8.87; Vector added 1.25% to $4.06; and Vista Group collected 1.09% to $3.70.

Orr, no more

While it didn’t impact price movements, Goodson said the sudden resignation of Reserve Bank of New Zealand (RBNZ) governor Adrien Orr was on traders' minds.

On balance, Goodson said he thought markets will have viewed Orr’s tenure as “mixed”, particularly during the post-Covid period, adding that traders will be paying close attention to who is chosen to replace him.

Tags: Market Close