The New Zealand sharemarket held its nerve as jittery bourses offshore took another dive on worries about sustained high inflation and increased bond yields.
The S&P/NZX 50 Index fell sharply at the opening – after Wall Street plummeted overnight – but then traded steadily all day to close at 13,119.79, down 54.59 points or 0.41 per cent. The index hit an intraday low of 13,039.61 points.
Volume was steady with 37 million shares worth $157.86 million changing hands, and there were 112 decliners and just 36 gainers over the whole market of 184 stocks.
The Dow Jones Industrial Average fell 1.63 per cent to 34,299.99 points – its second near-600 point fall in a week – the S&P 500 was down 2.04 per cent to 4352.63, and the technology-driven Nasdaq Composite had its worst one-day fall since March, declining 2.83 per cent to 14,546.68. The technology growth stocks have been the hardest hit in the market falls.
The Australia S&P/ASX 200 Index was down 1.07 per cent to 7198 points at 5.45pm NZ time.
US Federal Reserve chair Jerome Powell said inflation would remain higher for longer than previously anticipated. Central banks are moving closer to reducing their economic stimulus and planning for interest rate increases.
The US Senate is also at loggerheads over lifting the country's debt limit. Treasury Secretary Janet Yellen warned the US government may next month default on its debt, which is currently US$28.43 trillion ($40.91t).
The US 10 Year Treasury Note yield rose above 1.54 per cent before settling at 1.528 per cent, and the New Zealand 10 Year Government Bond yield was up 0.023 to 1.989 per cent. Crude oil went above US$80 a barrel for the first time in three years, pushing up energy costs.
Greg Smith, head of research for Fat Prophets, said the local market was weaker but more resilient considering the sell-off in the US. But those markets have had a big run to date – bigger than New Zealand's.
"But our market has held up better in the last month – down just 0.9 per cent – as we head into October which can be volatile. We don't have the same level of high-priced growth and technology stocks as overseas," he said.
"I wouldn't say markets overseas have reached the panic stage, but they are not too far away from important crossroads and the realisation that the pandemic economic stimulus has to be paid for and interest rates will start rising."
Among leading stocks Contact Energy fell 15c to $8.30; Ryman Healthcare declined 23c to $14.58; Ebos Group decreased 35c to $35.05; Freightways lost 16c to $12.67; and Port of Tauranga shed 15c or 2.13 per cent to $6.90.
But Mainfreight rebounded strongly, rising $2.92 or 3.12 per cent to $96.39; and Fletcher Building was up 6c to $7.16.
The Warehouse Group, which had risen strongly lately, gained another 7c to $4.15 after reporting a record net profit of $117.5m, up 164.6 per cent, for the year ending August 1. Revenue increased 7.6 per cent to $3.41 billion.
Online sales increased 5 per cent to $393.1m and now make up 11.5 per cent of group revenue. The Warehouse is paying a final dividend of 17.5 a share on December 3.
Smith said The Warehouse has been a proven pandemic performer – its click and collect sales increased 21 per cent – and its digitisation and agile strategy has paid off. Its share price has almost doubled over the past 12 months, and is up 50 per cent so far this year.
Electronic components maker Rakon surged 17c or 15.18 per cent to $1.29 after upgrading its full-year operating earnings (ebitda) to $39m-$44m, from $27m-$32m, because of increased business, resulting from a consumer device boom and an extensive chip shortage.
Green Cross Health rose 3c or 2.61 per cent to $1.18 after confirming it is working with Pacific Equity Partners to possibly buy New Zealand's biggest independent primary healthcare group Tamaki Health, which has more than 40 general practice and urgent care clinics.
Fonterra Shareholders' Fund rose 10c or 2.56 per cent to $4; South Port New Zealand gained 21c or 2.28 per cent to $9.41; Synlait increased 6c to $3.71; Heartland Group Holdings was up 8c or 352 per cent to $2.35; and Foley Wines rose 7c or 4.61 per cent to $1.59.
Other decliners were Trustpower, down 12c to $7.32; Scales Corporation falling 16c or 2.81 per cent to $5.54; Napier Port decreasing 8c or 2.48 per cent to $3.15; and Air New Zealand shedding 5c or 2.99 per cent to $1.625.
DGL Group down 12c or 3.75 per cent to $3.08; My Food Bag fell 4c or 2.92 per cent to $1.33; Bremworth declined 5c or 6.25 per cent to 75c; and Gentrack decreased 4c or 2.53 per cent to $1.54.