NZX 50 slides in cool start to spring as oil prices rise, RBNZ looms

New Zealand’s S&P/NZX 50 index fell in the first day of September, joining a broadly softer day across Asia as oil prices rose for another session amid the renewed tensions between the US and Iran, while rising bond yields knocked interest rate sensitive stocks such as Investore Property and Ryman Healthcare.

The Reserve Bank is expected to hike the official cash rate at its Wednesday policy review with domestic inflation remaining sticky, with elevated price rises weighing on central banks more broadly.

Local heavyweights were among the bigger drags on the NZX 50, with Auckland International Airport giving back some of Monday’s gains when the August MSCI index rebalancing drove heavy volumes of the country’s major gateway.

And across the Tasman, Kip McGrath Education was unchanged in late trading after its board recommended shareholders turn down a takeover by Crimson Education, calling the offer opportunistic and inadequate.

Spring back

The NZX 50 fell 130.4 points, or 0.9%, to 13,786.9, with 32 stocks declining and 18 gaining. The S&P/NZX 20 index futures contract for September slid 0.9% to 7,642 with 20 lots traded for a value of $153,000, while the NZX 20 sank 1.1% to 7,699.85.

Turnover across the main board was $132.6 million, of which Auckland Airport accounted for almost $18 million as the transport hub fell 3.2% to $8.57.

Stock markets across Asia were broadly weaker, following the soft lead from Wall Street as oil prices extended their gains and bond yields crept higher amid growing expectations the Federal Reserve’s open market committee will hike the benchmark rate later this month.

Japan’s Nikkei 225 dipped 0.2% in late trading, while Hong Kong’s Hang Seng dropped 1% as fast-fashion retailer Shein Global Holdings sank as much as 10% on its debut. Australia’s S&P/ASX 200 index was down 0.3% in late trading.

Brent crude oil futures rose 1.2% to US$91.53 a barrel at 5pm in Auckland, while the yield on New Zealand’s 10-year government bond advanced 6 basis points to 4.8%. The kiwi dollar traded at 59.09 US cents from 59.20 cents yesterday.

Meanwhile, New Zealand’s Reserve Bank is expected to lift the OCR a quarter-point to 2.75% at tomorrow’s meeting to help rein in price increases.

“While NZ is not exactly in the same boat, both the RBNZ and FOMC would agree that respective inflation rates in both countries have been uncomfortably high,” ASB Bank senior economist Mark Smith said in a note. “Tough talk on inflation needs to be ultimately backed up by action.”

Relative returns

Rate sensitive stocks posted the sharpest declines on the NZX 50 today, with Investore sinking 3.8% to $1.01, Ryman dropping 3.3% to $2.03, Stride Property Group falling 2.2% to $1.125 and Property for Industry decreasing 2.2% to $2.27.

Heavyweight stocks were among the bigger drags on the bourse, as Meridian Energy declined 1.6% to $5.44, Mainfreight slipped 1.5% to $65.97 and Infratil was down 1.1% at $14.26. Fisher & Paykel Healthcare decreased 0.5% to $44.20.

Vulcan Steel posted the biggest gain on the day, rising 3% to $6.63, while Sky Network Television hit its highest level on an adjusted basis since January 2020, ending the session up 2.5% at $3.74.

Spark New Zealand was the most heavily traded stock on the day with a volume of 5.2 million shares changing hands as it gained 1.9% to $2.18.

SkyCity Entertainment Group dipped 3% to 65.5 cents after settling the sale of two Auckland properties for $74.5 million, while T&G Global declined 1.4% to $2.75 as it completed the sale of its Fijian and Pacific businesses.

Across the Tasman, Kip McGrath was unchanged at 72.5 Australian cents after the company’s board urged shareholders to reject Crimson’s 73 cents per share offer, saying it was highly opportunistic and at a smaller earnings multiple than comparable transactions. The board also noted the blocking stake built up by Harvest Lane Asset Management, and said directors were actively looking for a better offer.

Reporting by Paul McBeth. Image from Curious News.