Sister companies Synlait and a2 Milk took a further hit on a quiet and flat New Zealand sharemarket as dairy prices and demand falls. In fact, most commodity prices have eased.
The S&P/NZX 50 Index soon lost steam on another light trading day, closing down 0.706 points or 0.01 per cent to 11,675.21 after reaching an early intraday high of 11,727.85.
There was an even split of 61 gainers and decliners across the whole market on extremely low volume of 22.94 million share transactions worth $85.76 million.
The ANZ World Commodity Price Index eased 1.9 per cent in April, after trending up since the start of the year. In local currency terms, the index fell just 0.8 per cent due to the NZ dollar depreciating slightly on a trade weighted index basis.
Dairy prices were down 4 per cent, meat and fibre 2.8 per cent and aluminium 7.3 per cent, while horticulture was flat and forestry increased 4.8 per cent. The crude oil price had fallen to US$102.85 a barrel.
ANZ said dairy was driven primarily by lower prices for whole milk powder which is highly influenced by demand from China. Market sentiment has deteriorated with the Shanghai and Beijing Covid lockdown affecting consumer buying opportunities.
Synlait was down 11c or 3.16 per cent to $3.357 and a2 Milk, which has a stake of nearly 20 per cent in Synlait, declined 14c or 2.9 per cent. But Fonterra Shareholders' Fund increased 6c or 2.11 per cent to $2.90.
Greg Main, Jarden Wealth Management adviser, said the local market was drifting sideways and looking for offshore leads at the moment.
"Some investors are sitting on the sideline and looking at other alternatives to ride out the market volatility. We are now seeing yields from bonds going over 5 per cent."
Main said all eyes will be on the latest move by the United States Federal Reserve overnight. The Fed is expected to increase its cash rate by 50 basis points to 0.75 per cent.
"Central banks have quite a balancing act and people will be watching how the Fed Reserve deals with controlling the inflation situation which is strong in the US." Inflation there is running at 8.5 per cent.
The March quarter labour market statistics showed unemployment in New Zealand was unchanged at 3.2 per cent but wage and salary growth accelerated by 3 per cent, in line with expectation but adding to inflation worries.
The energy stocks had another topsy-turvy day. Contact was down 16c or 1.97 per cent to $7.98; Mercury declined 7.5c to $5.875; Vector decreased 8c or 1.81 per cent to $4.34; and Meridian was up 6c to $4.75.
Longstanding rural services firm PGG Wrightson rose 25c or 6.31 per cent to $4.21 after increasing its full-year operating earnings (ebitda) guidance to $66m, from $62m. The company told the market it continued to see solid demand during the third quarter following a strong half-year result.
Ebos Group increased 37c to $41.88 after telling the Macquarie Australia conference in a presentation that the purchase of Life Healthcare opens up growth opportunities in South East Asia for medical devices and other group products.
Auckland International Airport was up 14c or 1.83 per cent to $7.80; Infratil increased 10c to $8.30; The Colonial Motor Company collected 12c to $10.70; and Allied Farmers rose 3c or 3.66 per cent to 85c.
Fletcher Building was down 11c to $6.06; Restaurant Brands fell 27c or 2.13 per cent to $12.43; Skellerup Holdings declined 11c or 1.93 per cent to $5.59; Tourism Holdings shed 6c or 2.03 per cent to $2.90; and Gentrack decreased 4c or 2.4 per cent to $1.63.
Port companies Marsden Maritime Holdings decreased 15c or 2.44 per cent to $6; Port of Tauranga increased 10c to $6.40; and Napier Port was up 4c to $2.94.
Property companies Investore was down 4c or 2.45 per cent to $1.59, and Property for Industry declined 5.5c or 2.11 per cent to $2.55.
Air New Zealand trading was halted while the airline completed the sale of the 274m shares not taken up by shareholders in the recent 2 for 1 rights offer. Air New Zealand raised $1.045 billion, with shareholders taking up 1.972b shares or 88 per cent of the new shares offered in the renounceable offer.
Shareholders who didn't take up their full entitlements will receive a pro rata share of any premium between the shortfall bookbuild and rights offer prices.
Air New Zealand told the market it was seeing encouraging signs in recent passenger booking activity and if this continued through to the end of the 2022 financial year, then its losses could be better than expected. The airline had forecast a loss of $800m. It last traded at 87c.