NZX 50 posts biggest weekly slide since 2022 as oil spikes, rate hikes feared

New Zealand’s S&P/NZX 50 index posted its steepest weekly decline in four years as the latest oil price spike stokes fears that central banks will need to raise interest rates ahead of key US inflation figures for the Federal Reserve’s next move.

Materials firm Vulcan Steel was at the bottom of the leaderboard for the week, while software firms Serko and Gentrack were weighed down as rising interest rates undermined valuations for tech companies.

The biggest companies on the NZX 50, such as Fisher & Paykel Healthcare, Infratil, and Auckland International Airport, were the main drag on Friday, with stock markets weak across Asia as investors pondered the outlooks for oil and interest rates.

And Winton Land rallied after majority shareholder and founder Chris Meehan stepped down from the board, following the revolt by independent directors that led to an exodus and short suspension from trading.

Gone ‘til November

The NZX 50 dropped 130.68 points, or 1%, to 13,580.33, taking its weekly slide to 2.8%, the sharpest fall since late September 2022.

Across the week, 11 companies fell by 5% or more, with Vulcan suffering the steepest decline of 17%, while Serko and Gentrack each tumbled 15%.

KMD Brands posted the biggest gain on the week, up 13%, after the founder of smaller rival surfwear brand Ghanda Clothing emerged as a new substantial shareholder of the retailer.

Within the index, 34 stocks fell on Friday, 10 rose and six were unchanged. The S&P/NZX 20 index futures contract for September declined 0.5% to 7,580, with 1,925 lots traded for a value of $14.5 million, while the NZX 20 slumped 0.9% to 7,543.96.

Turnover across the main board was $119.7 million, with F&P Healthcare accounting for $16.7 million as it fell 1.8% to $43.15.

Stock markets across Asia slid as bond yields rose to multi-year highs on mounting expectations central banks will have to raise interest rates in response to the surging oil prices. Brent crude oil front-month futures nudged up 0.2% to US$107.81 a barrel at 5pm in Auckland, although forward pricing falls below US$100/barrel from January 2027.

The European Central Bank hiked its deposit rate overnight and signalled more increases were likely, while upcoming US inflation data is seen as key on whether the Federal Reserve will raise its federal funds rate next week.

“September’s usually a miserable month if you go back through history,” said Peter McIntyre, an investment adviser at Craigs Investment Partners. “In many respects it’s not unusual, and then you throw in oil at US$100 a barrel.”

Can you take me higher

The yield on New Zealand’s 10-year government bonds climbed 16 basis points to 5.04%, the first time it’s been above 5% since November 2023.

Australia’s S&P/ASX 200 index was down 1% in late trading, while Hong Kong’s Hang Seng fell 0.7% and Japan’s Nikkei 225 index sank 2.4%.

Locally, the NZX 50 was weighed down by larger companies, with Infratil falling 1.2% to $14.51, Auckland Airport down 1.3% at $8.32, and Meridian Energy sliding 1.1% to $5.20.

Serko posted the steepest fall on the day, down 5.5% at $1.37, while Vulcan dropped 4% to $6.05 and Sanford slid 3.4% to 74 cents.

Briscoe Group posted the biggest gain on the NZX 50, rising 3.3% to $4.40, while dual-listed lender ANZ Group Holdings advanced 2.3% to $45.90 and Mercury NZ increased 1.4% to $6.69.

Precinct Properties NZ was the most heavily traded stock on the day with a volume of 3.3 million shares changing hands as the commercial landlord slipped 1.5% to 94 cents.

Outside the benchmark index, Winton jumped 3.1% to $1.175 after founder and majority shareholder Chris Meehan resigned from the property developer’s board.

Black Pearl Group fell 1.8% to 28 cents as it lodged amended versions of its annual report and accompanying investor presentation after the originals referred to net assets as net tangible assets. Activist shareholder Scrivener Capital penned an open letter to the software firm’s chair this week seeking an explanation on how the mistake was made during the audit.

Meanwhile, the BusinessNZ-BNZ performance of manufacturing index fell 1.2 points to 53.1, holding above the 50 level that separates expanding and shrinking activity. Doug Steel, an economist at BNZ, said expanding activity broadened across sectors, and painted a more positive picture for economic growth through the second half of the year. The kiwi dollar slipped to 58.26 US cents at 5pm in Auckland from 58.49 cents.

Reporting by Paul McBeth. Image from Curious News.