The S&P/NZX 50 Index tumbled all day and closed at 10,832.03, down 84.61 points or 0.78 per cent. Photo / NZME
Auckland Airport provided a welcomed earnings upgrade but the New Zealand sharemarket was overwhelmed by rising interest rates and fell nearly one per cent.
The S&P/NZX 50 Index tumbled all day and closed at 10,832.03, down 84.61 points or 0.78 per cent.
There were 103 decliners and 28 gainers over the whole market on volume of 25.81 million share transactions worth $107.36 million.
Jeremy Sullivan, investment adviser with Hamilton Hindin Greene, said the day was all about interest rates – and the Reserve Bank likely to hike the official cash rate by 75 basis points following hotter-than-expected inflation numbers.
He said two and 10-year bank swap rates were at 12 and 14-year highs respectively, and trading banks were now increasing mortgage rates. Five-year term mortgage rates were now at 7.29 per cent.
"If you are rolling over a $1 million mortgage from a 2.5 per cent rate to 7.5 per cent, that's an extra $40,000 to $50,000 in interest payments alone. The increasing interest rates will divert people's capital expenditure from other things and the reduced spending will close down the economy – and that's what is intended to bring down inflation," Sullivan said.
Auckland International Airport rose 16c or 2.22 per cent to $7.37 after significantly upgrading its full-year net profit estimate to $100m-$130m, from the earlier guidance of $50m-$100m, because of a stronger-than-expected rebound in the aviation market.
Auckland Airport, the third biggest stock on market capitalisation, now expects international passenger numbers will reach 60-70 per cent of pre-Covid levels and domestic passengers 85-90 per cent in the 2023 financial year. The airport is maintaining its capital expenditure of $600m-$700m.
Sullivan said Auckland Airport is lowly geared at 15.6 per cent and has a strong balance sheet with $10.2 billion assets. "There's plenty of upside for the airport to add value, in my view."
On the down day – even Wall Street lost momentum – local blue chip stocks quickly shed much of their recent gains.
Fisher and Paykel Healthcare fell 87c or 4.44 per cent to $18.73; Freightways was down 40c or 3.98 per cent to $9.66; a2 Milk decreased 14c or 2.33 per cent to $5.88; and Fletcher Building shed 18c or 3.54 per cent to $4.90.
Sullivan said he understood forward orders for new houses had fallen by up to 75 per cent and builders couldn't do fixed price contracts because of the increased costs and this affected their lending ability.
Infratil was down 13c to $8.02; Chorus shed 9c to $7.70; Summerset Group fell 20c or 2.04 per cent to $9.60; Delegat Group decreased 12c to $10.26; Manawa Energy declined 10c or 1.91 per cent to $5.13; and Restaurant Brands was down 20c or 2.67 per cent to $7.30.
Spark, declining 5.5c to $5.10, has an agreement with Government for a direct allocation of C-band spectrum, an enabler for the 5G roll-out, and in return Spark will spend an additional $24m between 2023 and 2025 to further expand mobile coverage in the rural areas and address mobile black spots on state highways.
Winton Land was down 4c to $2.32 after telling the market it has issued High Court proceedings under the Commerce Act, alleging anti-competitive conduct by Government housing agency Kāinga Ora over its Sunfield housing development. Winton said the costs of proceedings are not anticipated to materially affect full-year guidance.
Other decliners were SkyCity Entertainment, down 7c or 2.59 per cent to $2.63; Investore decreasing 3c or 2.01 per cent to $1.46; Vital Healthcare Trust falling 5.5c or 2.09 per cent to $2.345; and Scales Corp shedding 18c or 3.94 per cent to $4.39.
Seeka was down 8c or 2.06 per cent to $3.80; Eroad slid 7c or 5.04 per cent to $1.32; and Green Cross Health declined 6c or 4.69 per cent to $1.22;
Mainfreight added $1 to $66; Mercury Energy collected 7c to $5.27; Skellerup Holdings was up 9c or 1.8 per cent to $5.08; Serko increased 7c or 2.37 per cent to $3.02; and PaySauce rose 2.5c or 8.33 per cent to 32.5c.
Heartland Group, up 3c to $1.73, has conditionally agreed to buy Melbourne-based Challenger Bank for around A$36m ($39.86) and will transfer its Australian reverse mortgage and livestock business to the bank.
Heartland has pulled out of any deal to buy Sydney-based Avenue Bank. Heartland said reverse mortgages grew 24.4 per cent in New Zealand in the year ending June and 19.3 per cent in Australia.
Move Logistics, unchanged at $1.12, told shareholders at its annual meeting that operating earnings (ebitda) for the 2023 financial year would improve on the previous year's $54.3m but didn't say how much.
Move is buying the Atlas Wind vessel, with a capacity of 366 containers, from Europe for its new Transtasman shipping route, with the first sailing by the end of the year.