NZ sharemarket rocked by US inflation data

The New Zealand sharemarket bore the brunt of hotter-than-expected inflation data in the US that saw bond yields rise and more angst over the timing of any interest rate cuts.

The S&P/NZX 50 Index initially held up over the morning session but fell during the afternoon to close down 141.34 points, or 1.18 per cent, at 11,805.

There were 93 decliners and 42 gainers over the whole market on volumes of 27.52 million share transactions worth $111.78m.

Harbour Asset Management portfolio manager Shane Solly said there were plenty of factors in play with the local market taking its main reading from offshore news.

“We saw a busy night with slower US GDP growth and higher inflation raising question marks about whether the narrative of a robust, goldilocks-style US economy has run its course.” Wall Street’s benchmark S&P 500 was down 0.5 per cent, while the technology-heavy Nasdaq Composite closed 0.6 per cent lower with data showing the US economy grew much less than expected in the first quarter of 2024, at an annualised rate of 1.6 per cent.

The data also showed that the Fed’s preferred metric of underlying inflation jumped to 3.7 per cent from 2 per cent in the final quarter of last year — exceeding forecasts of 3.4 per cent.

That saw bond yields rise, which is typically negative for valuations.

The US inflation data followed Wednesday’s March quarter CPI in Australia which increased 1 per cent ahead of the 0.8 per cent forecast and led commentators to highlight the potential for interest rates to be increased across the Tasman.

Adding to the puzzle was the performance of some of the big US tech companies that reported after the market close — Google parent Alphabet, Microsoft and Amazon all beat expectations.

“The magnificent seven continue to drive the market along, so while the macroeconomics scene remains cloudy, in the meantime these companies are beating expectations,” Solly said.

The Australian market was also weak, dragged down by the inflation situation and the materials sector with BHP falling 4.4 per cent after the mining giant revealed a A$60 billion bid for British copper play Anglo American.

Here at home, there was further weak economic data with the ANZRoy

Morgan New Zealand Consumer Confidence index down 4 points to

82.1, close to lows seen during the Global Financial Crisis, although still slightly above the more recent pandemic lows. Ebos shares, down 3.34 per cent to $34.30, and Spark, down

1.8 per cent to $4.65, were notable decliners and Solly noted those two in particular were susceptable to the half-yearly review of the MSCI Large Cap Index. Air New Zealand fell 1.8 per cent to 54.5c, Auckland International Airport was down 1.52 per cent to $7.75 and Tourism Holdings fell 0.68 per cent to $2.93.

Shares in property company Argosy were unchanged at $1.11 after it reported a full-year portfolio revaluation loss of $111.7m for the 12 months to March 31, a 5.4 per cent decrease on the company’s book value. Other property stocks were also weak with Stride down 2.31 per cent at $1.27 and Property for Industry down 2.22 per cent at $2.20.

Millennium & Copthorne Hotels fell 2c, or 1.05 per cent, to $1.89.