US inflation fears send local shares lower
Leaders F&P and Meridian among those to lose ground
The worry about rising inflation and interest rates reared its head again and drove the New Zealand sharemarket down more than 1 per cent.
The S&P/NZX 50 Index fell 134.75 points or 1.09 per cent to 12,224.50 following another increase in US 10-Year Treasury bonds. There were 41 gainers and 91 decliners over the whole market on steady volume of 46.72 million share transactions worth $187.74 million.
The US Treasury yield reached a high of 1.61 per cent last week but moved back to 1.41 per cent before climbing to 1.47 per cent overnight. The New Zealand 10-Year Government bond yield has moved from a low of 0.4 per cent to 1.85 per cent.
Sam Dickie, senior portfolio manager with Fisher Funds, said the latest rise in US interest rates and the worry about “nascent inflation” flowed into the local market.
“It was left to the reopening stocks to keep bubbling away, while the Covid beneficiaries such as Fisher & Paykel Healthcare and interest ratesensitive companies like Meridian dragged the market down.
“Overseas markets are also taking a breather. You’ve seen the US going up every day in a steady, non-volatile fashion, but the S&P 500 Index has fallen 2.5 per cent in the last two days,” Dickie said.
The Australian S&P/ASX 200 Index was down 1.24 per cent to 6733.30 points at 5.45pm (NZ time), and the technology-drive Nasdaq Composite in the US fell 2.7 per cent to 12,997.75.
The local market is looking forward to today’s listing of My Food Bag, the meal kit company. My Food Bag raised $342m through a placement of 185m shares at $1.85 a share.
“I hope it goes well,” said Dickie. “We don’t get many of these exciting initial public offerings nowadays.”
Market leaders Fisher & Paykel Healthcare fell 84c or 2.91 per cent to $28, and Meridian Energy was down 21.5c or 3.65 per cent to $5.675.
Synlait Milk plunged 39c or 10.13 per cent to a low of $3.46 after announcing that its 2021 net profit will be less than a half of the previous year’s $75.2m. Synlait’s share price has been on a slide since early November when it sat at $5.93. Its twoyear high was $11.20 on March 18, 2019, and it fell to $4.40 on March 19 last year when Covid-19 struck.
Synlait has been hampered lately by the goings-on of its major customer and shareholder a2 Milk, which fell 9c to $10.01. Synlait told the market there’s an ongoing uncertainty about a2 Milk’s demand for the remainder of 2021 and the 2022 financial years.
Reopening stocks — those battered by the Covid pandemic — continue to recover, with Sky City Entertainment, which fell to $2.87 on February 22, rising 8c or 2.56 per cent to $3.21.
Cyclical stock Fletcher Building attracted heavy trading, rising 6c to $6.60 on volume worth $22.08m. New listing NZ Automotive Investments, which includes 2 Cheap Cars, fell 1c to $1.28. NZ Automotive took the number of stocks listed on the NZX to 185.
I hope it goes well. We don’t get many of these exciting initial public offerings nowadays.
Sam Dickie of Fisher Funds on today’s My Food Bag listing