Market close: Rise in long-term US bond yields gives NZ shares jitters

Photo / NZME

A slight rise in long-term bond yields in the United States provided some jitters for the New Zealand sharemarket which fell more than half a per cent for the second day running.

The S&P/NZX 50 Index was down 82.91 points or 0.65 per cent to 12,590.31, after sliding all day from a high of 12,703.93. The index has fallen 1.15 per cent so far this week.

Trading was steady with 40.92 million shares worth $167.53 million changing hands, and there were 53 gainers and 79 decliners over the whole market.

The US 10-year Treasury bond yield increased less than a basis point to 1.291 per cent and the 30-year yield rose 1.6 basis points to 1.94 per cent as investors there focused on the Federal Reserve two-day monetary policy meeting later this week.

Shane Solly, portfolio manager with Harbour Asset Management, said the increase in the bond yields was a distraction for the market.

"Over the last month or so the market has done well with defensive and growth stocks, but now we are seeing investors rotating back into cyclical shares," Solly said.

The US bond yield rise affected interest rate-sensitive energy companies, with Contact falling 15c or 1.79 per cent to $8.22; Meridian down 6c to $5.28; and Mercury dropping 14c or 2.05 per cent to $6.68. Precinct Properties also fell 4c or 2.41 per cent to $1.62.

Market leader Fisher and Paykel Healthcare's recent strong run slowed, after falling 59c or 1.82 per cent to $31.86 on trade worth $20.68m. Solly said there are less hospitalisations with the Covid Delta and therefore less need for respiratory products.

Global marketer a2 Milk tumbled for the second day running, down 27c or 4.04 per cent to $6.41. After recovering to $7.62 on July 13, a2 Milk has now fallen nearly 10.5 per cent in two days.

Solly said latest statistics showed export volumes of infant formula were below expectations. The volumes through the Lyttelton and Auckland ports were down 11 per cent for the June quarter compared with the previous corresponding period.

Leading retirement village operator Ryman Healthcare continued its rocky ride, this time declining 15c to $12.65 after sitting at $14.95 on May 12. Summerset Group Holdings declined 12c to $13.09.

Ebos Group shed 15c to $31.18; Restaurant Brands was down 18c to $15.55; Serko declined 12c to $7.39; and Enprise Group fell 60c or 15.92 per cent to $3.17.

Radius Residential Care, which recently made a placement to raise capital at 52c a share, fell 15c or 19.74 per cent to 61c; and Plexure Group was down 2c or 2.82 per cent to 69c.

The travel and leisure stocks received a boost with Victoria and South Australia moving out of lockdowns and reopening their borders but not with New South Wales. Auckland International Airport increased 5c to $7.10; Air New Zealand gained 0.005c to $1.49; cinema software firm Vista Group rose 7c or 3.04 per cent; and SkyCity Entertainment gained 2c to $3.17.

Synlait Milk gained 4c to $3.75; Pushpay Holdings picked up 4c or 2.29 per cent to $1.79; DGL Group was up 10c or 6.62 per cent to $1.61; Scott Technology picked up 5c or 1.89 per cent to $2.70; and T&G Global increased 6c or 2.06 per cent to $2.97.

Z Energy increased 5c or 1.79 per cent to $2.84 on renewed speculation that it could be involved with corporate activity. Solly said the suggestion that Z Energy is a takeover target resurfaces every three to six months.

"But nothing is impossible at the moment. There is a lot of capital out there and long-term investors are looking to take advantage of sharemarkets' short-term timeframes, as we saw with a takeover offer for Sydney Airport," he said.

Software firm ikeGPS reported a strong June quarter for new contracts and rose 3c or 2.61 per cent to $1.18. New contracts for the first quarter of the 2022 financial year were worth $6.1m, more than 300 per cent higher than the previous corresponding period. Revenue of $2.6m for the quarter increased 12 per cent, and new contracts worth $11.5m have completed in the United States in the past six months.

TIL Logistics confirmed it is on track to achieve full-year operating earnings (ebitda) of at least $57.4m and profit will reflect increased property costs with expanded warehousing and improvement programme. Shareholder Chris Dunphy, who joined the board this month, is now the executive director, and TIL's share price was up 1c to $1.31.