NZX 50 hits 2 ½-month low as Infratil knocked by AI

New Zealand’s S&P/NZX 50 index fell for a fourth session, with Infratil weighing on the index as the calls for regulating artificial intelligence knocked companies tied to the sector’s massive infrastructure spend for another day.

Interest rate-sensitive companies such as Vector and commercial landlords declined as rising oil prices stoked expectations for rate hikes by the Federal Reserve, pushing government bond yields up around the world.

Meanwhile, retailers were weaker after Statistics New Zealand figures showed softer spending on credit and debit cards in August, and retirement village operators declined as Real Estate Institute of NZ figures notched up another decline in house prices and transaction volumes.

And ASB Bank announced a new chief executive will take up the reins of the country’s second-biggest lender by assets from December, when Vittoria Shortt steps down from the role she’s held for the past nine years.

Going under

The NZX 50 dropped 76.47 points, or 0.6%, to 13,484.22, having hit its lowest level since June 29 in intraday trading. Within the index, 31 stocks fell, 13 gained and six were unchanged. The S&P/NZX 20 index futures contract for December was unchanged at 7,533, with 100 lots traded for a value of $752,000, while the NZX 20 slid 0.6% to 7,470.14.

Turnover across the main board was $107.5 million, of which Fisher & Paykel Healthcare accounted for $18.5 as the country’s biggest listed company nudged up 0.1% to $43.35.

Infratil dropped 3.5% to a four-month low $13.61 on a value of $10.3 million, as the growing consensus among US AI developers for regulation was panned by investors pondering the impact on infrastructure spending programmes.

Goodman New Zealand, which is increasing its focus on building data centres, fell 0.8% to $1.935, with 1.9 million stapled securities traded in the heaviest volume for the day.

“The key question for markets is whether calls to slow the development of frontier AI models ultimately translate into lower capital-expenditure plans from major hyperscalers such as Meta, Microsoft and Alphabet,” Devon Funds Management said in a note. “Current commentary appears more focused on controlling the pace of advanced model development than reducing investment in commercially deployable AI products; however, investors will closely monitor hyperscaler capex guidance and any further industry discussions with OpenAI and Anthropic.”

Stock markets across Asia were generally weaker as Brent crude oil futures rose 1.6% to US$107.39 a barrel at 5pm in Auckland, fuelling expectations for central banks to raise interest rates as the Fed prepares to review its settings this week. Australia’s S&P/ASX 200 index fell 1% in late trading, while Japan’s Nikkei 225 dropped 0.2% and Hong Kong’s Hang Seng slid 0.4%.

The yield on New Zealand’s 10-year government bond rose three basis points to 5.05%, near a three-year high.

Locally listed companies sensitive to interest rates were broadly weaker, with regulated lines company Vector down 3.5% at $4.44.

Tight budgets

Retailers dropped after Stats NZ figures showed core retail spending on electronic cards fell 1% in August as households remained under pressure. Briscoe Group declined 1.2% to $4.25 and Hallenstein Glasson Holdings fell 0.7% to $12.30, while KMD Brands advanced 0.5% to $1.95. Warehouse Group slid 1.5% to 64 cents and Michael Hill International was unchanged at 43 cents.

Yen Nguyen, an economist at ASB Bank, said the data showed consumer spending remained sensitive to higher fuel prices and increased mortgage rates.

“Recent escalating US-Iran tensions have sent oil prices higher, which poses an upside risk to the inflation outlook,” Nguyen said in a note. “Given this emerging headwind and already-persistent headwinds elsewhere facing the household sector, the recovery of consumer spending is likely a 2027 story.”

Meanwhile, retirement village operators fell as REINZ data showed house sale prices and volumes declined in August. Ryman Healthcare fell 1.6% to $1.91 and Summerset Group Holdings slipped 3.6% to $7.60, while Oceania Healthcare decreased 2.8% to 70 cents.

Stock market operator NZX fell 2.7%, or 4 cents, to $1.43 after the company went ex-dividend on an upcoming payment of 3.2 cents per share to shareholders.

Sanford posted the biggest decline on the NZX 50, falling 6.9% to $6.06 in its fourth straight decline.

Gentrack had the biggest gain on the benchmark index, up 5.8% at $4.17, joining a global rally among software-as-a-service firms, which have been seen as under threat from AI replacements. Vista Group International rose 1.1% to $2.73, while travel software developer Serko fell 2.3% to $1.27.

The a2 Milk Co rose 2.2% to $8.52, even as Chinese retail sales growth of 0.2% fell short of expectations. Fonterra Shareholders’ Fund units increased 1.3% to $7.90, while Comvita advanced 1.9% to 80.5 cents.

And ASB chief executive Shortt announced her retirement from the bank in December, with Commonwealth Bank of Australia group executive of institutional banking Sinead Taylor to succeed her.

Reporting by Paul McBeth. Image from Curious News.