Market close: 'Flight to safety', a2 Milk slumps

NZ stocks fell again ahead of the Reserve Bank's OCR decision tomorrow. Photo / Supplied

With further interest rate rises around the corner, investors piled out of the higher risk stocks and into safer equities as the New Zealand sharemarket had a rocky trading session.

The S&P/NZX 50 Index closed down 42.86 points or 0.36 per cent at 11,889.17, after reaching an intraday high of 11,932.03 and low of 11,867.73.

There were 93 decliners and 48 gainers over the whole market on volume of 45.24 million share transactions worth $172.89m.

Investors here followed the moves overseas with technology stocks again taking a hit overnight in the United States, and the Nasdaq Composite was down 2.18 per cent to 13,411.96. The Australian S&P/ASX 200 Index was down 0.47 per cent to 7449.7 points at 5.45pm NZ time.

"There's been a flight to safety," said Jeremy Sullivan, investment advisor with Hamilton Hindin Greene. "People are selling high risk and buying low risk shares – the high-growth stocks are very susceptible to any moves in interest rates.

"The US 10 Year Treasury bond yield has gone above its Chinese equivalent for the first time in 12 years and the Federal Reserve has signalled that it will start tightening its monetary policy in May."

Inflation is tipped to reach 8.4 per cent in the US with consumer prices rising 1.1 per cent in March.

The local market also steadied for a further increase in the official cash rate, with a prediction of a 25 basis points rise to 1.25 per cent.

"The Reserve Bank might have wanted to increase 50 basis points but I think they will hold off until their next big (monetary policy) review and see what happens in Ukraine. And the latest (New Zealand) inflation data is out next week," Sullivan said.

Amongst the growth and technology stocks, a2 Milk slumped a further 23c or 4.39 per cent to $5.01; Serko was down 25c or 5 per cent to $4.75; Eroad fell 37c or 10.42 per cent to $3.18; and Vista Group decreased 5c or 2.73 per cent to $1.78.

An Australian broker has downgraded the a2 Milk target price to $A4.80 as the share went under $5 during the day's trading in New Zealand. The broker felt a2 Milk would be having difficulty getting product to market because of the Shanghai lockdown.

Lower risk stocks Ebos Group rose $1.59 or 3.95 per cent to $41.89; Port of Tauranga increased 21c or 3.39 per cent to $6.41; Mainfreight gained $1.41 to $81.51; Skellerup Holdings collected 22c or 3.93 per cent to $5.82; and Freightways was up 9c to $12.49.

Vector Energy, which is reviewing its smart metering business after being approached by prospective investors, rose 11c or 2.65 per cent to $4.26.

Other energy stocks Contact declined 10c to $7.90; Mercury was down 16c or 2.61 per cent to $5.97; Genesis fell 3c, or 1 per cent, to $2.78 and Trustpower increased 10c to $7.31.

Michael Hill International, up 6c or 4.84 per cent to $1.30, reported strong trading in the third quarter ending March 27. Store sales increased 11.1 per cent and for the year to date were up 4.8 per cent, despite more than 10,000 lost trading days amongst its 283 jewellery stores in New Zealand, Australia and Canada. Online sales increased 31 per cent for the year to date, making up 7.6 per cent of group revenue.

NZME was up 4c or 2.34 per cent to $1.75 after telling the market that first quarter advertising revenue was up on the same period last year. NZME expects full-year earnings to be $67m-$72m.

Former Port of Tauranga chief executive Mark Cairns is joining Auckland International Airport's board. Cairns is also chairman of Freightways and director of Meridian and Sanford. The airport's share price was down 12.5c to $7.505.

Other decliners were Chorus decreasing 6c to $7.24; ANZ Banking Group down 55c or 1.82 per cent to $29.70; Ryman Healthcare shedding 25c or 2.67 per cent to $9.10; and Hallenstein Glasson falling 20c or 3.23 per cent to $6.

DGL Group fell 22c or 6.27 per cent to $3.29; Argosy Property was down 3c or 2.17 per cent to $1.35; AFT Pharmaceuticals declined 10c or 2.82 per cent to $3.45; and Just Life Group decreased 5c or 6.85 per cent to 68c.

Amongst the gainers, Harmoney rose 8c or 5.52 per cent to $1.53; Accordant Group increased 6c or 3.08 per cent to $2.01; Gentrack was up 5c or 3.03 per cent to $1.70; and Bremworth gained 3c or 6 per cent to 53c.

The Z Energy takeover by Australian fuel distributor Ampol has been approved by the Overseas Investment Office and the High Court will be considering the scheme of arrangement on April 26. Z Energy was up 2c to the offer price of $3.76 a share.