NZX50 sinks as Iran jitters send oil back over US$100/bbl

New Zealand’s S&P/NZX 50 index joined a slide across Asia as Brent crude oil prices climbed back above US$100 a barrel as Iranian attacks on oil tankers overshadowed the record release of emergency reserves by the International Energy Agency.

Blue chip companies held for their reliable dividends such as Meridian Energy, Mercury NZ and Auckland International Airport were the biggest drags on the main board as rising energy prices push bond yields up further amid growing expectations the Reserve Bank and other central banks will need to hike interest rates to stamp out inflation.

Commercial landlords including Precinct Properties NZ, Stride Property Group, and Goodman Property Trust attracted heavy trading volumes, albeit without much shift in pricing, in what appeared to be investment portfolio adjustments.

And import terminal Channel Infrastructure was among the day’s gainers as the government works through how it will release energy stocks to the IEA’s pool, with New Zealand at least holding enough stock on and offshore to meet its 90-day commitment, unlike neighbour Australia, which is turning to higher sulphur fuels to shore up supply.

Striking fear in investors’ hearts

The NZX50 dropped 93.84 points, or 0.7%, to 13,199.29, with 29 stocks declining, 13 gaining and eight unchanged. Turnover across the main board was $187.5 million, with Fisher & Paykel Healthcare accounting for $22.9 million as it increased 0.1% to $38.90.

Stock markets across Asia were weaker with Australia’s S&P/ASX 200 index down 1.6% in late trading, while Japan’s Nikkei 225 dropped 1.6% and Hong Kong’s Hang Seng declined 1.2%. Brent crude oil futures climbed 9.3% to US$100.49 a barrel after Iranian attacks on three cargo ships overshadowed IEA efforts to calm energy supplies with the release of 400 million barrels of oil.

Polymarket prediction markets are pricing in a 47% chance of a ceasefire by the end of April, with the odds getting long through the Asian trading session.

Reliable dividend-paying companies were the biggest drags on New Zealand’s benchmark as rising bond yields sapped the attraction of their income, with the yield on 10-year government bonds climbing 9 basis points to 4.66%.

Meridian fell 3.8% to $5.34, Auckland Airport declined 1.3% to $8.42, and Mercury dipped 0.8% to $6.30.

“We’ve got staglation – it’s as simple as that,” said Matt Goodson, managing director at Salt Funds Management. “It’s all about the Strait of Hormuz, with US futures down 1% and oil up 9%.”

Air New Zealand touched a new record-low on an adjusted basis of 45 cents, ending the day down 1.1% at 45.5 cents. The national carrier’s chief executive Nikhil Ravishankar told RNZ’s Morning Report programme that the airline will be cancelling about 1,100 flights largely on main trunk routes to limit the impact of surging jet fuel prices.

Dividend adjustments

Sky Network Television posted the steepest decline on the NZX, falling 4.1%, or 14 cents, to $3.26 after shedding rights to a 15 cents per share dividend, while Summerset Group Holdings slipped 1.3%, or 13 cents, to $10.25 after going ex-dividend on an upcoming payment of 13.2 cents per share.

Commercial landlords were mixed in heavy trading, with Precinct Properties the most traded stock on the day with a volume of almost 10 million shares as it rose 1.4% to $1.125, while Stride Property was unchanged at $1.17 on a volume of 4.7 million, Goodman Property gained 1% to $1.95 with 3.7 million units traded, and Argosy Property slipped 0.9% to $1.12 on a volume of 1.7 million.

Salt’s Goodson said the property index held up relatively well against the prospect of rising interest rates, with the volumes looking like shifts in portfolios.

Port of Tauranga declined 0.1% to $7.94 after updating investors on its plans to build infrastructure to support population growth in the upper North Island. The port operator’s board has approved selling land to fund the development, with proceeds expected to generate $152 million.

Vista Group International posted the biggest gain on the NZX50, up 3.8% at $1.93, while Napier Port Holdings rose 2.3% to $3.64 and KMD Brands advanced 2.2% to 23.5 cents.

Import terminal operator Channel Infrastructure rose 1.9% to $2.75 as New Zealand’s government works through how it will contribute its share of oil to the IEA’s release, with associate resources minister Shane Jones saying local fuel companies aren’t reporting significant supply issues.

Across the Tasman, Australia’s federal government is loosening fuel quality standards to allow higher sulphur fuels for the next 60 days to alleviate its own squeeze, with 50 days of oil imports onshore making it the only country in the IEA that didn’t meet its treaty obligations.

The kiwi dollar fell to 59.05 US cents at 5pm in Auckland from 59.43 cents yesterday, and traded at 82.77 Australian cents from 82.84 cents.

Reporting by Paul McBeth. Image from Channel Infrastructure.