Market commentary

WELLINGTON: New Zealand shares edged closer to a bear market with their seventh fall in nine trading days as local house prices continue 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% after reaching an intraday high of 11,246.13.

There were 51 gainers and 85 decliners across the main board, 41.5 million shares worth $143.08 million changing hands.

The NZX gross index has now fallen more than 17% from its all time high of 13,558.19 set on January 8 last year.

The US Nasdaq Composite Index, driven by highgrowth technology stocks, has already passed the crucial 20% market and is down 29% from its peak, after falling 3.18% to 11,364.24 points overnight.

Listed on the Nasdaq are two New Zealandbred 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% to 3935.18 overnight and is now 18% off its all time high. The Dow Jones Industrial Average has fallen 13.5% from its peak.

US inflation, at 8.3%, was slightly higher than expected after the April consumer price index increased 0.3%. Analysts predicted 8.1% but it was still lower than the annual inflation of 8.5% in March, and the index slowed for the first time in eight months.

At home, annual house price inflation is well past its peak and higher mortgage rates weighed on the market. The REINZ House Price Index fell 0.8% in April and is now down 4.9% from its November peak.

Seasonally adjusted house sales fell 6.9% and are down more than 30% compared with the corresponding time last year. ANZ Research expects house prices to fall 10% during the remainder of the year.

Dan Stratful, investment adviser with Forsyth Barr, said the New Zealand market was one of the highest interest ratesensitive 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. Investors are now getting 5.5% for bonds,’’ Mr Stratful said. —