The New Zealand sharemarket is in bear market territory. Photo / Carol Atkinson
The New Zealand sharemarket is in bear market territory. Photo / Carol Atkinson
New Zealand shares edged closer to a bear market with their seventh fall in nine trading days as local house prices continued to slide and United States inflation remains hot.
It was a rocky day for the S&P/NZX 50 Index – closing at 11,177.36, down 55.81 points or 0.5 percent after reaching an intraday high of 11,246.13.
There were 51 gainers and 85 decliners across the main board, with 41.5 million shares worth $143.08m changing hands.
The NZX gross index has now fallen more than 17 per cent from its all-time high of 13,558.19 set on January 8 last year.
The US Nasdaq Composite Index, driven by high-growth technology stocks, has already passed the crucial 20 per cent market and is down 29 per cent from its peak, after falling 3.18 per cent to 11,364.24 points overnight.
Listed on the Nasdaq are two New Zealand-bred companies and Rocket Lab has tumbled from its high of $US20.72 ($NZ33.06) after listing in late August; and Allbirds, selling sustainable shoes, has fallen from $US28.89 ($46.09) to $US4.09 (6.52) after listing in early November.
The S&P 500 Index went under the 4000 points level for the second time in a week, falling 1.65 per cent to 3935.18 overnight and is now 18 per cent off its all-time high. The Dow Jones Industrial Average has fallen 13.5 per cent from its peak.
US inflation, at 8.3 per cent, was slightly higher than expected after the April consumer price index increased 0.3 per cent. Analysts predicted 8.1 per cent but it was still lower than the annual inflation of 8.5 per cent in March, and the index slowed for the first time in eight months.
The NZX gross index has fallen more than 17 per cent from its all-time high of 13,558.19 set on January 8 last year. Photo / Greg Bowker
At home, annual house price inflation is well past its peak, with higher mortgage rates weighing on the market. The REINZ House Price Index fell 0.8 per cent in April and is now down 4.9 per cent from its November peak.
Seasonally adjusted house sales fell 6.9 per cent and are down more than 30 per cent compared with the same time last year. ANZ Research expects house prices to fall 10 per cent during the remainder of the year.
Dan Stratful, investment adviser with Forsyth Barr, said the New Zealand market was one of the highest interest rate-sensitive in the world.
"When the interest rates were low, people were busy buying our dividend stocks like Contact, Meridian and Spark and pushed the index ahead. But with rates rising, the international investors have packed up and left the market.
"There are very few buyers in the local market at present and there are some pockets where growth stocks still haven't hit their fair value," Stratful said. "Investors are now getting 5.5 per cent for bonds."
He said it looks like inflation will be hanging around longer and any recovery in the markets will be a drawn-out affair. It won't be the short, sharp recession when Covid first hit and the quick V-shaped recovery afterwards. In March 2020 the NZX index crashed 29.5 per cent, reaching 8498.7 points.
Ryman Healthcare had another bounce-back, rising 53c or 6.08 per cent to $9.25, while fellow retirement village operator Summerset Group Holdings slipped 23c or 2.12 per cent to $10.64.
Freightways was up 14c to $10.74; Port of Tauranga gained 17c or 2.78 per cent to $6.2; PGG Wrightson rose 22c or 5.05 per cent to $4.58; Manawa Energy increased 11c to $6.98; Ebos Group was up 82c or 2.04 per cent to $40.97; and Scales Corporation collected 10c or 2.14 per cent to $4.77.
Manuka honey producer Comvita rose 10c or 3.17 per cent to $3.25 after telling the market its supply chain will be largely unaffected by the Chinese Covid lockdowns. Demand in its Hong Kong subsidiary has returned to pre-Covid levels and inventory has increased to service levels to market.
For the 10 months ending April Comvita is reporting operating earnings (ebitda) of $23.9m and believes it will meet its full-year guidance of $27m-$30m. Operating profit has so far increased 29 per cent compared with the previous 10-month period.
Fisher and Paykel Healthcare, bearing the brunt of a broker downgrade, declined 55c or 2.63 to $20.35; Mainfreight fell $1.90 or 2.52 per cent to $73.60; Chorus declined 10.5c to $7;.05; and Restaurant Brands lost 14c to $12.05.
Energy companies Contact declined 10c to $7.52; Mercury was down 9c to $5.64; Vector shed 13c or 3.05 per cent to $4.13; and Genesis was up 4.5c to $2.72.
Retailers Hallenstein Glasson was down 15c or 2.59 per cent to $5.65; KMD Brands declined 4c or 3.28 per cent to $1.18; and Michael Hill International fell 5c or 4.35 per cent to $1.10.
Gentrack fell 9c or 5.63 per cent to $1.51; Eroad was down 17c or 5.41 per cent to $1.51; and Goodman Property Trust declined 5.5c or 2.55 per cent to $1.105.
