The Dow Jones Industrial Average was down 1.08 per cent to 33,684.53; S&P 500 fell 1.16 per cent to 4119.38; and Nasdaq Composite also declined 1.08 per cent to 12,080.51. Wall Street was also waiting anxiously for another expected interest rate hike by the Federal Reserve.
Across the Tasman, the S&P/ASX 200 Index was down 1.14 per cent to 7184.5 points at 6pm NZ time.
At home, the tight labour market continues to provide inflationary pressures. Unemployment was unchanged in the March quarter at 3.4 per cent, but wage growth rose to new record levels.
The Labour Cost Index (LCI) increased to 4.3 per cent, from 4.1 per cent in the December quarter. This was the highest level since the data series began in 1992.
Average ordinary time hourly earnings, measured by the Quarterly Employment Survey, increased 7.6 per cent to reach $38.93, with current inflation running at 6.7 per cent.
The NZ dollar strengthened more than one cent against the Australian, rising from A92.20c to A93.50c and impacting the banks with ANZ declining 77c or 2.91 per cent to $25.71, and Westpac falling $1.02 or 4.14 per cent to $23.60.
ANZ Research said the labour market remained white-hot in the first quarter and well beyond maximum sustainable levels, although slightly weaker LCI wage growth than expected will be a welcome development for the Reserve Bank given its importance for non-tradeable (domestic) inflation
“We maintain our expectation for just one further 25 basis points hike in the official cash rate this month. We expect labour market pressures to ease over the rest of the year and into 2024 as labour demand continues to soften and labour supply via migration recovers,” ANZ said.
Matt Goodson, managing director of Salt Funds Management, said the weak US banking sector, the Reserve Bank of Australia decision to increase interest rates and the labour data here all came together and dragged the local market down.
“Inflation in the services sector is still rampant, and it’s going to be a tough period for markets with further monetary policy tightening when some people thought central banks would stop increasing rates. Our view is that it’s far too early to do this,” Goodson said.
Most of the leading stocks were struck down. Fisher and Paykel Healthcare declined 30c to $27.50; Auckland International Airport decreased 10c to $8.65; Spark shed 6.5c to $5.145; Mainfreight gave up 99c to $71.30; and Fletcher Building was down 16c or 3.37 per cent to $4.59.
Freightways shed 14c to $9.45; Chorus was down 9.5c to $8.58; Skellerup declined 8c to $4.87; Port Tauranga decreased 8c to $6.31; and a2 Milk fell 19c or 3.231 per cent to $5.72.
In the energy sector, Meridian was up 4c to $5.40; Genesis was down 6c or 2.17 per cent to $2.712; and Vector declined 6c to $3.99.
Retirement village stocks Summerset Group was down 11c to $8.19; Ryman Healthcare declined 9c to $5.26; and Oceania Healthcare decreased 2c or 2.82 per cent to 69c.
Hallenstein Glasson gave up a further 11c or 1.78 per cent to $6.13; SkyCity was down 5c or 2.13 per cent to $2.30; Comvita decreased 12c or 4 per cent to $2.88; Vulcan Steel declined 28c or 3.23 per cent to $8.40; and Smartpay Holdings fell 8c or 4.71 per cent to $1.62.
In the property sector, Precinct shed 3c or 2.37 per cent to $1.235; Goodman Trust was down 4.5c or 2.1 per cent to $2.10; and Vital Healthcare Trust declined 5c or 2.15 per cent to $2.28.
Amongst the few gainers, Serko increased 6c or 2.69 cent to $2.29; Steel & Tube added 2c or 2.17 per cent to 94c; and PGG Wrightson was up 3c to $4.435. PGG reaffirmed its full-year operating earnings (ebitda) guidance at $57m, saying it has performed well over the first nine months of the financial year.
NZME, up 1c to $1.08, is partnering The Warehouse Group, down 1c to $1.73, to create a weekly online live shopping event. The online channel called Selection Live Shopping will be hosted by the NZ Herald website.
