Market close: Inflation menace strangles NZ sharemarket

Shares in Restaurant Brands, which operated KFC and other fast food joints, gained ground today. Photo / Luke Kirkness

The inflation ogre maintained its stranglehold on the New Zealand sharemarket, down more than half per cent, with the interest rate-sensitive energy and property stocks again being hit.

The day before the latest New Zealand inflation rate announcement, the S&P/NZX 50 Index fell sharply in the morning and recovered slightly to close at 10,785.92, declining 82.17 points or 0.76 per cent. The index was at its lowest level in 10 weeks.

There were 88 decliners and 43 gainers over the whole market on light volume of 22.73 million share transactions worth $78.02m.

After a further retreat on Wall Street over the weekend, the Australian S&P/ASX 200 Index was down 1.42 per cent to 6663 points at 6pm NZ time.

The September quarter consumer price index (CPI) is expected to show a fall in headline inflation from 7.3 per cent but an increase in core inflation (locally-based prices) from 6.2 per cent – similar to the trend in the United States CPI released last week.

Jeremy Sullivan, an investment adviser with Hamilton Hindin Greene, said a survey of US consumers showed they expect interest rates to continue rising.

"All eyes will be on New Zealand inflation in the morning and core inflation is the sticky one as wage pressures continue to mount. Pay rises are harder to remove from inflation and interest rate rises will stay.

"I expect the Reserve Bank will increase the official cash rate another 50 basis points in November."

Sullivan said the weakness in dividend yield stocks was broad-based and the inflation saga kept dragging on.

Mercury Energy was down 16c or 3.05 per cent to $5.09; Meridian declined 9c or 1.96 per cent to $4.51, and Manawa (formerly Trustpower) shed 10c or 1.83 per cent to $5.35.

Contact was unchanged at $7.14 after reporting an increase in mass market electricity and gas sales of 405GWh in September, up from 389GWh in the same month last year. South Island hydro storage was 148 per cent of the mean and North Island 135 per cent.

Goodman Property Trust was down 3c to $1.95; Kiwi Property declined 2.5c or 2.91 per cent to 834.5c; Precinct Properties decreased 2.5c or 2.07 per cent to $1.18; Stride shed 4c or 2.56 per cent to $1.5.2, and Investore was down 3c or 1.99 per cent to $1.48. Property for Industry, however, gained 3c to $2.40.

Fisher and Paykel Healthcare had a strong turnaround, gaining 35c or 1.87 per cent to $19.05 after reaching an intraday low of $18.37.

Fletcher Building was down 9c or 1.84 per cent to $4.81; Auckland International Airport decreased 11.5c to $7.085; Ebos Group declined 74c or 2.03 per cent to $35.70; Mainfreight shed 88c to $65.60, and Synlait Milk was down 8c or 2.48 per cent to $3.14.

Port of Tauranga declined 12c or 1.93 per cent to $6.10, and Napier Port was down 8c or 2.74 per cent to $2.84.

Restaurant Brands rebounded 25c or 3.55 per cent to $7.30; AFT Pharmaceuticals increased 13c or 2;.72 per cent to $3.62; and CDL Investments was up 2c or 2.5 per cent to 82c.

Insurer Tower rose 3.5c or 5.69 per cent to 65c after upgrading its full-year net profit, including large events, to about $26m, up from a range of $21m-$25m. Gross written premiums have increased 13 per cent to $457m for the year ending September and customer numbers have grown 4 per cent to 317,000.

Cancer diagnostics company Pacific Edge increased 1.5c or 3.3 per cent to 47c after reporting its advanced genomic biomarker Cxbladder tests have increased. Test volumes rose 36 per cent to 7861 in the September quarter compared with 5780 in the same period last year. Volumes were up 11 per cent up on this year's June quarter.

For the six months ending September, test volumes were up 34 per cent to 14,916, compared with 11,136 in the same period last year. Pacific Edge has recently invested in the United States market.

Air New Zealand, down 1c to 74c, has opened its $75m five and a half years bond offer, with the ability to accept $25m in over-subscriptions.

Other decliners were PGG Wrightson, falling 14c or 3.3 per cent to $4.10; Vista Group decreasing 3c or 1.84 per cent to $1.60; Seeka shedding 20c or 4.98 per cent to $3.82; Vulcan Steel down 12c to $7.73; SkyCity giving up 6c or 2.23 per cent to $2.63; and Kingfish fund losing 5c or 3.68 per cent to $1.31.

Chatham Rock Phosphate gained 1c or 3.85 per cent to 27c after detailing the seven projects it is involved with in New Zealand, French Polynesia and Queensland with phosphate prices at 10-year highs.