Market close: NZ shares plunge as US inflation figure rattles markets

US inflation is now running at 7.5 per cent - the hottest rate in 40 years. Photo / AP

The higher-than-expected United States inflation figure rattled the New Zealand sharemarket and those overseas – and the leading stocks took heavy falls as interest rate hikes loom.

The trading graph of the S&P/NZX 50 Index resembled the Winter Olympics ski slope – downhill all the way.

The index fell 239.27 points or 1.93 per cent to 12,173.78, and the top stocks collectively suffered a 2.33 per cent decline. Still, the NZX index closed the week up more than 2.4 per cent for the month.

There were 98 decliners and 40 gainers over the whole market, with 35.24 million shares worth $155.52 million changing hands.

Shane Solly, portfolio manager with Harbour Asset Management, said central banks were dependent on data and US inflation had gone higher. There was a view that the Federal Reserve now needed to go hard and early with increasing interest rates.

"There has already been a lot of positioning by investors to allow for the higher rates. If rates are going up, then it does hit the growth stocks more than others," Solly said.

US inflation is now running at 7.5 per cent – the hottest rate in 40 years – after the January consumer price index rose 0.6 per cent from the previous month, with higher prices for a wide range of goods including food, electricity and shelter. Economists predicted inflation would be 7.3 per cent.

The Federal Reserve next meets on March 15-16, and is predicted to raise rates by 50 basis points, from 0.25 per cent.

On Wall Street, the Dow Jones Industrial Average was down more than 500 points or 1.47 per cent to 35,241.59; S&P 500 declined 1.81 per cent to 4504.08; and Nasdaq Composite fell 2.1 per cent to 14,185.64.

At home, Fisher and Paykel Healthcare was down $1.19 or 3.94 per cent to $29.05; Mainfreight declined $2.80 or 3.23 per cent to $84.01; Contact Energy, reporting its latest financial result on Monday, fell 14c to $8.06; EBOS Group decreased $1.58 or 3.86 per cent to $39.40; and Spark shed 10c or 2.19 per cent to $4.47.

Fletcher Building, reporting on Wednesday, declined 5c to $6.45; Auckland International Airport was down 6c to $7.32; a2 Milk fell 24c or 4.07 per cent to $5.65; Infratil decreased 19c or 2.39 per cent to $7.76; and Summerset Group Holdings was down 37c or 2.99 per cent to $12.02.

The falls continued. Arvida was down 6c or 3.59 per cent to $1.61; Napier Port fell 7c or 2.26 per cent to $3.03; Chorus declined 9c to $6.86; My Food Bag decreased 5c or 4.46 per cent to $1.07; Property for Industry shed 7c or 2.46 per cent to $2.775; and Serko was down 16c or 2.95 per cent to $5.26.

Air New Zealand declined 3.5c or 2.14 per cent to $1.60; Sky Network Television shed 9c or 3.35 per cent to $2.60; Vista Group was down 8c or 3.64 per cent to $2.12; EROAD fell 12c or 2.66 per cent to $4.49; and Pacific Edge lost 4c or 3.67 per cent to $1.05.

AFT Pharmaceuticals declined 9c or 2.2 per cent to $4; Comvita was down 7c or 1.94 per cent to $3.53; Pushpay Holdings fell another 3c or 2.83 per cent to $1.03; Ventia Services Group decreased 5c or 2.04 per cent to $2.40; and Vulcan Steel shed 9c to $10.09 after producing a strong half-year result the day before.

Kathmandu Holdings edged ahead 1c to $1.41 after reporting expected operating earnings (ebitda) of $9m-$11m for the half-year, with a $35m impact from Covid and an additional $14m spend on brand marketing. Kathmandu stores rebounded in the second quarter with same store sales increase of 15.1 per cent. Online sales continued to grow and make up 17 per cent of the $405m group sales.

T&G Global, down 5c to $2.85, told the market that its full-year profit is now forecast at $12.5m-14.5m compared with $16.6m for the 2020 financial year.

Amongst the few gainers, Turners Automotive was up 6c to $4.34; Winton Land rose 13c or 3.92 per cent to $3.45; DGL Group increased 10c or 3.13 per cent to $3.30; and PGG Wrightson collected 5c to $5.40.