New Zealand’s S&P/NZX 50 index was the worst performer across Asia as investors weighed up Reserve Bank governor Anna Breman’s balancing act in managing the inflationary impacts of the energy shock and drag on growth.
The yield on New Zealand’s 10-year government bond eased after Breman’s speech, joining a global rally in bonds, while finance minister Nicola Willis’s fiscally neutral support package for low-income families through the petrol price spike didn’t spook analysts.
The local bourse reversed earlier gains on optimism US President Donald Trump’s five-day pause on bombing Iranian energy infrastructure may lead to a ceasefire in the Middle East, with Air New Zealand and Tourism Holdings following global travel and tourism stocks higher.
Meanwhile, KMD Brands rallied after confirming it received an approach to spin out its Rip Curl business but dismissed it as not offering enough value to shareholders.
Seven-month low
The NZX50 dropped 197.97 points, or 1.5%, to 12,701.75, its lowest close in more than seven months, with 34 stocks falling, 11 gaining and five unchanged. Turnover across the main board was $157 million, of which Summerset Group Holdings accounts for $15.2 million as it rose 2.4% to $9.31, while Ryman Healthcare fell 1.4% to $2.11 on a value of $13.3 million.
The local bourse was a laggard across Asia, as Australia’s S&P/ASX 200 index rose 0.5% in late trading, while Hong Kong’s Hang Seng was up 1.8% and Japan’s Nikkei 225 advanced 1.1%.
The NZX50 started the session in positive territory after US President Trump called a five-day pause on the war in Iran to see if a ceasefire deal can be brokered, boosting stocks on Wall Street amid optimism of an early end to the conflict.
The yield on 10-year government bonds fell 5 basis points to 4.83%, joining a global rally in bonds and coming after Reserve Bank governor Breman’s speech notes were published outlining the tension facing the central bank as it gauged whether it would be able to look through a short-term price spike in petrol without the energy shock feeding inflation by setting expectations for price and wage increases.
“It was a prudent and measured approach from her,” said Jeremy Sullivan, an investment adviser at Hamilton Hindin Greene. “It’s a very fluid situation – the largest energy disruption in history is not something you can look through.”
Sullivan noted the weakness in companies that typically offer reliable dividend yields, such as commercial landlords, were weaker, with Stride Property Group down 2.5% at $1.155, Goodman Property Trust declining 2.1% to $2.91 and Precinct Properties NZ falling 1.9% to $1.04.
Among other companies held for their dividends, Auckland Airport fell 2.1% to $7.93, Mercury NZ dropped 3% to $6.21 and Meridian Energy slipped 1.8% to $5.34.
Foreign exposure
Medical device maker F&P Healthcare slid 2.2% to $36.18 and formula company a2 Milk Co dropped 3.3% to $10.90.
The kiwi traded at 58.33 US cents at 5pm in Auckland from 58.35 cents yesterday.
Tech stocks led the NZX50 lower, with Gentrack sinking 7.2% to $6.87 and Serko dropped 5.7% to $1.50.
NZX dipped 0.4% to $1.295 after the Australian Financial Review’s Street Talk column reported online trading platform BlackBull Markets has tapped Barrenjoey, Forsyth Barr and UBS to explore a dual-listing on in New Zealand and Australia.
Meanwhile, Air New Zealand and Tourism Holdings clawed back some of Monday’s losses, with the airline up 3.6% at 43 cents and the rental campervan operator gaining 1.4% to $2.16.
KMD bounced from an all-time low as it posted the biggest gain on the day, up 4.7% at 20 cents after confirming it had been approached by smaller surf company Stokehouse with a proposal to spin out the Rip Curl business. The retailer, which is due to report first-half earnings on Wednesday, dismissed the initiative as not adding value for shareholders.
Among other retailers, Hallenstein Glasson Holdings rose 1.9% to $9.37 and Briscoe Group was unchanged at $4.60 after the government announced its targeted support for low-income families by boosting the in-work tax credit by $50 a week from April 7.
The initiative will come out of the government’s operating allowance, soothing some fears that it wouldn’t be fiscally neutral.
Turners Automotive Group gained 0.8% to $8.52 after outlining its plan to achieve an annual pre-tax profit of $100 million over the next five years.
Outside the benchmark index, Rakon fell 1% to $1.48 after Bourns extended its takeover bid at $1.55 a share to May 7. The US suitor has secured almost 75% acceptances.
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