NZ Sharemarket Ends Week Down Almost 2%

The New Zealand sharemarket finished a choppy week on Friday with a fall of nearly 1% as higher-than-expected inflation brought the reality of higher interest rates closer to home. The S&P/NZX 50 Index was weak all afternoon and closed at 13,448.24, down 108.63 points or 0.8%. The index fell nearly 2% for the week and is down 0.8% so far this year. There were 42 gainers and 88 decliners on the main board, with 28.6 million shares worth $93.7m changing hands.

Annual inflation increased to 3.1% after the Consumers Price Index (CPI) for the December quarter rose 0.6% – well above the Reserve Bank of NZ’s (RBNZ) November forecast of 2.7%. ANZ, which forecast annual inflation at 3%, said the latest data will make for uncomfortable reading for the RBNZ, but indicators of spare capacity suggest there is still some, albeit diminishing, underlying disinflation in the pipeline that should help return headline inflation to within the 1-3% target band. When combined with the recent sharp improvement in activity data, the latest inflation suggests hikes this year are likelier than not. ANZ is now forecasting the first 25 basis-point hike in the official cash rate in December, with two follow-up increases in February and April 2027, taking the rate back to an assumed neutral level of 3%.

Bond yields have increased, affecting interest-rate-sensitive stocks on the local market. The NZ 10 Year Government Bond yield rose to nearly 4.6%, the same level as late July last year and had fallen under 4% in October. The 2 Year Government Bond yield was up five basis points to 3.3%.

Property stocks were weaker, as was Infratil, down 29c or 2.61% to $10.81, and Spark, decreasing 3c to $2.24. Argosy declined 2.5c or 2.01% to $1.22; Precinct Properties shed 3c or 2.53% to $1.15; Kiwi Property was down 2c or 1.9% to $1.03; and Vital Healthcare Property Trust decreased 4c or 1.98% to $1.98. Port of Tauranga was down 8c to $7.97; a2 Milk shed 28c or 2.82% to $9.66; Contact Energy decreased 10c to $9.25; Winton Land declined 8c or 3.85% to $2; and 2 Cheap Cars fell 3c or 4.38% to 65.5c. South Port increased 49c or 5.63% to $9.20; Comvita rose 5c or 8.06% to 67c; Scales Corp gained 11c or 1.95% to $5.76; Steel & Tube was up 2.5c or 3.82% to 68c; and Blackpearl Group added 3c or 3.06% to $1.01.

Vector, unchanged at $4.90, reported a 1.3% increase in electricity volume distributed to 4543GWh for the six months ending December. In the past year, total electricity connections grew 1.3% to 637,247, but new connections were down 1% for the six months ending December compared with the previous corresponding period. Fonterra Co-operative is holding a special meeting on Feb 19 for shareholders to vote on a tax-free capital return of $2 a share, equivalent to $3.2 billion, following the sale of its global consumer business and brands such as Anchor and Mainland to French multinational Lactalis. The $4.22b deal is expected to be completed by the end of March. Fonterra Shareholders’ Fund was up 1c to 8.19, and the co-operative share price was unchanged at $5.98.

Source: Business Desk

Ahead of the local open SPI futures were 11 points lower at 8843.

- close [Morningstar with AAP]: Australia's share market has snapped a three-session losing streak thanks to an uptick in global risk sentiment, but hotter-than-expected jobs figures have increased the likelihood of an interest rate hike.

The S&P/ASX200 rose 65.8 points on Thursday, up 0.75 per cent, to 8,848.7, as the broader All Ordinaries gained 63.9 points, or 0.7 per cent, to 9,172.5.

The top-200 initially surged as investors celebrated a cooling of US-Europe relations, before rolling over when surprise December employment jump narrowed odds the Reserve Bank will lift the cash rate in February.

"It was a funny day, because we saw real strength early on, and the market was up almost one per cent and then we saw the unemployment data come out," Moomoo market analyst Michael McCarthy told AAP.

The numbers to some degree had corrected from overly weak figures in November, he said.

"These monthly numbers do bounce around, so people aren't going to get too carried away, but the immediate interpretation was rate increases coming very soon," Mr McCarthy said.

Rates markets now imply a 60 per cent chance of a rate hike at the Reserve Bank's February meeting, with 25 basis-points of cuts priced-in by May.

Investors were largely unperturbed after three sessions of losses, unloading gold stocks as safe-haven buyers became profit takers, and the recently red-hot raw materials sector turned negative after supporting the broader bourse for most of the week.

Gold prices pulled back from Wednesday's $US4,888 ($A7,185) an ounce record, falling below $US4,800 and dragging the All Ordinaries gold sub-industry 5.6 per cent lower.

Segment giant Northern Star tanked more than eight per cent to $26.18 after slashing production guidance due to crusher outages, extended works and lower grades at its Pogo project.

Elsewhere in materials, Rio Tinto extended gains after a strong quarterly update on Wednesday, while Fortescue swung 5.1 per cent in the other direction after cost jumps overshadowed record iron ore production in the first half.

Mixed miner South32 sailed more than five per cent higher after maintaining production guidance across assets it operates, and remains on track with its capital management program.

Banks returned to form, helping boost the financial sector 1.9 per cent as NAB led its big four competitors higher.

The Commonwealth Bank snagged a handy 2.3 per cent boost to $150.61, reclaiming December lows after slipping to its lowest price since April 2025 earlier in the week.

Energy stocks traded almost three per cent higher as oil prices bounced on the back of easing tensions between the US and its European allies.

The utilities sector continued its run higher, up 5.5 per cent since Monday, with segment giant Origin extending its gains since announcing it would extend the life of Australia's largest coal-fired power station.

Woodside shares leapt 2.9 per cent to $24.20, while Santos surged 5.3 per cent to $6.38 as it improved output in the recent quarter and loaded its first cargo from it Barossa LNG project.

Consumer discretionary stocks rebounded strongly from three days of losses, up 2.4 per cent in a broad-based rally.

Droneshield was the top-200's best performer, trading 9.5 per cent higher after a price target upgrade from Bell Potter.

The Australian dollar spiked to 15-month highs on the back of the jobs report and is buying 68.05 US cents, up from 67.36 US cents on Wednesday at 5pm.

The Aussie was further supported by improving risk sentiment, soaring metals and commodity prices and reports Australia's second-largest superannuation fund, the Australian Retirement Trust, plans to increase its foreign exchange hedging ratios.

ON THE ASX:

The S&P/ASX200 rose 65.8 points, or 0.75 per cent, to 8,848.7

The broader All Ordinaries jumped by 63.9 points, or 0.7 per cent, to 9,172.5

The NZX 50 Lost -8.99 points (-0.07%) to 13547.88

[Morningstar with Dow Jones]:

U.S. stocks ended higher. The DJIA gained 0.6% to 49,384.01, the S&P 500 climbed 0.5% to 6,913.35 and the Nasdaq lifted 0.9% to 23,436.02.

Among S&P 500 companies, the top three gainers were Arista Networks Inc ANET surging 8.74%, Datadog Inc DDOG jumped 6.28%, and Northern Trust Corp NTRS lifted 6.01%.

The biggest decliners were Abbott Laboratories ABT which dropped 10.06%, McCormick & Co Inc MKC fell 8.05%, and GE Aerospace GE lost 7.38%.

Asia

Chinese shares closed higher. The benchmark Shanghai Composite Index added 0.1% to 4,122.58 and the Shenzhen Composite Index rose 0.7% to 2,713.51.

Hong Kong shares ended higher. The benchmark Hang Seng Index gained 0.2% to 26,629.96.

Japanese shares ended higher. The Nikkei Stock Average lifted 1.7% to 53,688.89.

India shares ended higher. The BSE SENSEX rose 0.5% to 82,307.37.

Europe

Stocks in the U.K. finished higher. The FTSE 100 Index added 0.1% to 10,150.05. In Europe, shares closed higher. The Germany's DAX lifted 1.2% to 24,856.47, and the France's CAC 40 added 1% to 8,148.89