War, inflation weighing on investors’ mood
The New Zealand sharemarket ran out of puff in a rocky session as uncertainty over inflation and the Ukraine war prevailed. But there was one bright spot — the oil price fell as the United States and some of its allies increased the supply.
The S&P/NZX 50 Index was up and down all day on light trading as investors hung back. In the end, the index declined 20.83 points or 0.17 per cent to 12,089.43.
There were 60 gainers and 78 decliners over the whole market, with 29.87 million shares worth $123.31 million changing hands.
The index was down just 0.3 per cent for the week but fell nearly 7.8 per cent in the March quarter. On Wall
Street, the Dow Jones Industrial Average was down 4.6 per cent for the quarter, the S&P 500 declined 4.9 per cent and the Nasdaq Composite fell 9 per cent — the worst performance since the start of 2020 when Covid-19 struck.
The crude oil price went under US$100 a barrel and was trading at US$99.14 at 5.45pm NZ time. The US is releasing 1 million barrels a day from its reserves for six months (a total of 180m barrels), and its allies are chiming in with 30m-50m more barrels. Opec agreed to raise output targets by 432,000 barrels a day by May 1.
But inflation won’t go away. The US Federal Reserve’s preferred inflation gauge, the personal consumption expenditures price index, hit 5.4 per cent compared with the same time last year — the highest level since 1983.
Greg Smith, head of retail with Devon Funds Management, said moderating commodity prices will ease inflationary pressures, but these were already elevated as a consequence of pandemic-induced stimulus, and will need to be dealt with by higher interest rates, with likely consequences for higher-priced growth stocks. Fisher & Paykel Healthcare was up 15c to $24.50; Restaurant Brands rose 36c or 2.6 per cent to $14.20; Skellerup Holdings increased 9c to $6.06; Briscoe Group collected 8c to $5.83; and fellow retailer KMD Brands gained 3c or 2.21 per cent to $1.39.
Ebos Group was down 61c to $40.86; Mainfreight shed 50c to $83.25; Auckland International Airport declined 8c to $7.75; and Contact $8.05.
Synlait Energy Milk gained decreased 4c to 10c $3.35 to after making a strong recovery in the six months ending January, following its first loss in eight years.
Air New Zealand, seeking $1.2 billion from investors, was down 2.5c or 1.94 per cent to $1.265 and the big test for its share price will come next week when the stock goes ex-rights.