Market close: NZ shares feel heat from Australia's first interest rate hike

The local sharemarket fell as the RBA hiked interest rates across the Tasman.

Australia's first interest rate hike in more than 11 years to combat rising inflation buffeted the New Zealand sharemarket, which fell nearly 1 per cent.

The S&P/NZX 50 Index started strongly but fell steadily throughout the afternoon in expectation of the Australian Reserve Bank announcement (at 4.30pm NZ time).

The index closed down 108.44 points or 0.92 per cent to 11,675.92 (on September 24, 2020 it was at 11,689.89) after reaching an intraday high of 11,830.05.

It was another light trading day of 19.48 million shares worth $55.68, and there were 45 gainers and 81 decliners on the main board.

The Australian Reserve Bank increased its official cash rate 25 basis points to 0.35 per cent after reaching a record low of 0.1 per cent in November 2020. Inflation across the Tasman has risen to 5.1 per cent, and the bank signalled more rises to come, stoking cost-of-living pressures ahead of the federal government election.

Jeremy Sullivan, investment advisor with Hamilton Hindin Greene, said the local market is experiencing a buyer's strike.

"Investors are getting fatigued about what to do next and buying is starting to dry up. They are waiting for the markets to settle down and for cues to buy. They are struggling to see past the rising inflation and interest rates and what will happen in Ukraine," Sullivan said.

Next Monday night (NZ time) is regarded as a critical time when Russia celebrates its victory over Germany in the Second World War and is expected to make further "step change" announcements on its invasion of Ukraine.

Mercury, which has become the fifth largest company on the stock exchange following its purchase of Trustpower's retail business, declined 11c or 1.82 per cent to $5.95. Mercury now has a market capitalisation of $8.22 billion, with only Spark, Auckland International Airport, Meridian and Fisher and Paykel Healthcare above it.

Other energy companies Vector gained 5c to $4.42, and Trustpower was up 10c to $7.
Auckland International Airport decreased 14c to $7.66; Mainfreight declined $1.45 to $79.80; Port of Tauranga was down 15c or 2.33 per cent to $6.30; Serko lost 11c or 2.1'6 per cent to $4.99; and Steel & Tube fell 7c or 4.58 per cent to $1.48.

Other decliners were AFT Pharmaceuticals down 16c or 4.44 per cent to $3.44; The Colonial Motor Company shedding 16c to $10.58; and Bremworth decreasing 3c or 5.17 per cent to 55c.

The dividend-yielding property companies were hit. Stride was down 5c or 2.63 per cent to $1.85; Argosy fell 4.5c or 3.4 per cent to $1.328; Goodman Property Trust declined 5c or 2.24 per cent to $2.18; Kiwi Property shed 3c or 2.84 per cent to $1.025; and Vital Healthcare Property Trust was down 3.5c to $3.

Infratil manager Morrison & Co has bought just over 5 million of its shares for almost $40m. Infratil's share price was down 14.5c to $8.20.

Ryman Healthcare, due to report its latest financial result on May 20, went back under $9, falling 13c to $8.93. One broker forecasts a solid full-year with a 7 per cent increase in profit to $240m. The harder call is whether the ongoing share price weakness is now appropriately factoring concerns of negative house price sentiment and inflationary pressures, the broker said.

Fellow retirement village operators Summerset Group Holdings was down 18c to $11.45, and Oceania Healthcare declined 2c or 2 per cent to 98c.

Retailers Briscoe Group decreased 14c or 2.33 per cent to $5.86, and The Warehouse Group was down 6c or 1.8 per cent to $3.28.

Skellerup Holdings rebounded 19c or 3.45 per cent to $5.70; Comvita increased 6c or 1.81 per cent to $3.38; Fonterra Shareholders' Fund was up 4c to $2.84; and Eroad gained 13c or 4.06 per cent to $3.33.

Software firm ikeGPS surged 12c or 16 per cent to 87c after reporting an increase in revenue and signed contracts for the year ending March. Total revenue rose 71 per cent to $16m and signed contracts were worth $26m, up 122 per cent on the previous year.
Utility and communications customers grew to 349, mostly based in North America.

Move Logistics was down 11c or 7.8 per cent to $1.30 after telling the market the turnaround in the business was taking longer than anticipated. Move is looking to sell its specialist and lifting division, and has reduced its full-year operating earnings (ebitda) guidance to $53m-$56m, down from $61.3m for the 2021 financial year.

Z Energy will delist from the NZX on May 10 following the $2 billion sale to Australian fuel retailer Ampol. In turn, Ampol is selling Gull Petroleum to Allegro Funds for $572m.