Market close: RBA's surprise hike continues to pinch bank stocks

Photo / NZME

The Commonwealth Bank of Australia's cut to its gross domestic product (GDP) outlook prompted bank shares to slide down the index, with the Australian reserve bank's dramatic 50-basis point hike flowing into New Zealand's market for a second day.

The Australian Financial Review reported that GDP is expected to reach 2.3 per cent in the December quarter, with the annual growth now forecast at 3.5 per cent this year, a drop from 4.7 per cent. The S&P/NZX 50 Index fell 54.9 points, or 0.49 per cent to 11,211.31. Turnover was $140.1 million and 51 stocks rose, while 89 stocks fell.

Greg Main, a wealth adviser at Jarden, said banks, particularly those in Australia, "had really sold off since the RBA statement".

"Central banks are going to have to be flexible, responsive and understanding of which levers they pull," he said.

Main said Heartland Bank had been dragged lower because of it and was down 2.9 per cent to $1.98. Westpac shares felt the biggest pinch after falling 4.1 per cent to $23.55, while ANZ Bank shares were down 1.3 per cent to $26.45.

Main said it was a "bit of an unknown" for the markets on exactly how the central banks would proceed, which had added to the shock around the RBA's 50bp rate hike.

Dairy co-operative Fonterra Shareholders Fund Unit stocks were up 2.6 per cent to $3.14 again after it announced yesterday it was introducing a new share buyback programme. A2 Milk Company shares were down 2.9 per cent to $4.99, and Synlait Milk was also down 2.3 per cent to $3.35.

Retirement village and rest home operator Ryman Healthcare was also down 2.7 per cent to $9.10, while home healthcare service company Radius Healthcare was down 4 per cent to 36 cents and Oceania Healthcare shares were flat at $1.01.

Sky Network Television was down most of the day before rising 3.8 per cent to $2.84, picking up some ground it lost yesterday with its surprise announcement that the network wasn't looking to be acquired – but to be the acquirer.

Glass supplier Metro Performance Glass fell 11.1 per cent to 24 cents, along with Chatham Rock, which fell 12.7 per cent to 31 cents.

Australian petroleum company Ampol was one of the few big gainers of the day, up 10.2 per cent to $40.98 as oil prices jumped higher globally.

Cancer diagnostics company Pacific Edge also led the index higher, rising 1.4 per cent to 71 cents.

CMC Markets analyst Tina Teng said in a note that the NZ dollar had been facing headwinds from economic uncertainty and bank stocks could continue to feel the pinch from RBA's rate hikes.

Independent treasury adviser Peter Cavanaugh said data was currently taking a "third place" after global risk sentiment and what the central banks are expecting. "It's becoming a bit of a relativity exercise," he said.

He said because the RBA had decided to put up interest rates at a faster pace than the markets were expecting and because of the global focus on inflation, it was going to have a negative effect.

"What's interesting is that it's having a greater effect on the kiwi dollar than the Australian dollar."

The NZ dollar was trading at 64.36 US cents at 3pm in Wellington, down from 64.73 cents. The trade-weighted index was at 71.77, from 71.91 yesterday.