Market close: Inflation and interest rate worries drive NZ sharemarket down

The worry about rising inflation and interest rates reared its head again and drove the New Zealand sharemarket down more than 1 per cent.

The S&P/NZX 50 Index fell 134.75 points or 1.09 per cent to 12,224.50 following another increase in US 10-Year Treasury bonds. There were 41 gainers and 91 decliners over the whole market on steady volume of 46.72 million share transactions worth $187.74 million.

The US Treasury yield reached a high of 1.61 per cent last week but moved back to 1.41 per cent before climbing to 1.47 per cent overnight. The New Zealand 10-Year Government bond yield has moved from a low of 0.4 per cent to 1.85 per cent.

Sam Dickie, senior portfolio manager with Fisher Funds, said the latest rise in US interest rates and the worry about “nascent inflation” flowed into the local market.

“It was left to the re-opening stocks to keep bubbling away, while the Covid beneficiaries such as Fisher and Paykel Healthcare and interest rate sensitive companies like Meridian dragged the market down.

“Overseas markets are also taking a breather. You’ve seen the US going up every day in a steady, non-volatile fashion, but the S&P 500 Index has fallen 2.5 per cent in the last two days,” Dickie said.

The Australian S&P/ASX 200 Index was down 1.24 per cent to 6733.30 points at 5.45pm (NZ time), and the technology-drive Nasdaq Composite in the US fell 2.7 per cent to 12,997.75.

The local market is looking forward to Friday’s listing of My Food Bag, the well-known meal kit company. My Food Bag raised $342m through a placement of 185m shares at $1.85 a share.

“I hope it goes well,” said Dickie. “We don’t get many of these exciting initial public offerings nowadays.”

Market leaders Fisher and Paykel Healthcare fell 84c or 2.91 per cent to $28, and Meridian Energy was down 21.5c or 3.65 per cent to $5.675.

Fellow energy stock Mercury lost 16c or 2.54 per cent to $6.14; Tilt Renewables was down 13c or 2.02 per cent to $6.31; Auckland International Airport declined 29c or 3.96 per cent to $7.03; and Ebos Group shed 27.5c to $28 after reaching an intraday day high of $28.79.

Wine exporter Delegat Group fell 25c to $14.75; and apple exporter Scales Corporation decreased 15c or 3.26 per cent to $4.45.

Synlait Milk plunged 39c or 10.13 per cent to a low of $3.46 after announcing that its 2021 net profit will be less than a half of the previous year’s $75.2m. Synlait’s share price has been on a slide since early November when it sat at $5.93. Its two-year high was $11.20 on March 18, 2019, and it fell to $4.40 on March 19 last year when Covid-19 struck.

Synlait has been hampered lately by the goings-on of its major customer and shareholder a2 Milk, which fell 9c to $10.01. Synlait told the market there’s an ongoing uncertainty about a2 Milk’s demand for the remainder of 2021 and the 2022 financial years as it rebalances inventory levels, resulting in a significant drop in its infant formula production.

Re-opening stocks – those battered by the Covid pandemic – continue to recover, with Sky City Entertainment, which fell to $2.87 on February 22, rising 8c or 2.56 per cent to $3.21.

Cyclical stock Fletcher Building attracted heavy trading, rising 6c to $6.60 on volume worth $22.08m. Freightways increased 13c to $10.98; Skellerup Holdings gained 9.5c or 2.11 per cent to $4.59; and Mainfreight was up $1.48 or 2.21 per cent to $68.60.

Retirement village operators Ryman Healthcare was up 8c to $15.30, and Summerset Group Holdings gained 9c to $13.09. Retailer The Warehouse Group increased 5c to $3.30.

Amongst the automobile stocks, The Colonial Motor Company jumped 21c or 2.36 per cent to $9.10. New listing NZ Automotive Investments, which includes 2 Cheap Cars with its 12 dealerships nationwide, fell 1c to $1.28. NZ Automotive took the number of stocks listed on the NZX to 185.

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