NZ Sharemarket Has Small Fall, Down 0.2%

The New Zealand sharemarket had a small fall yesterday for the second day running, while interest rate forecasts both here and overseas captured investors’ attention. The S&P/NZX 50 Index dipped sharply in the late morning but then traded steadily and closed at 13,363.31, down 29.67 points, or 0.22%, after reaching an intraday low of 13,3210.74. There were 62 gainers and 69 decliners on the main board with turnover reaching 35.4 million shares worth $151.1m.

In the United States, the Federal Reserve kept its benchmark interest rate range unchanged at 3.5-3.75% for the fourth consecutive meeting, but new chair Kevin Warsh indicated there may be a rate increase rather than a reduction by the end of the year. NZ's gross domestic product grew 0.8% in the first quarter of this year, and, with an upward revision to 0.5% for the three months ending December, annual growth was 1.5% – beating the market expectation of 1% and the Reserve Bank of NZ’s (RBNZ) 1.2%. ANZ Research said the data largely pre-dated the conflict in the Middle East, and high-frequency indicators suggest the economy stalled after the conflict broke out. But if oil prices stay at current levels, there are good odds the recovery will resume. The GDP data won’t materially shift the RBNZ’s thinking, ANZ said. ANZ is still forecasting a 25-basis point increase in the Official Cash Rate (OCR) to 2.5% in July, though “easing oil prices mean it is no longer a slam dunk.” The RBNZ will be reviewing the OCR at its meeting on July 8.

Jeremy Sullivan, investment adviser with Hamilton Hindin Greene, said wholesale interest rates had fallen 10% in NZ since the Iran-US ceasefire and drop in oil prices. “This takes the pressure off the inflation front, and the market is now pricing in two OCR rises rather than three this year. There is a two-thirds chance of a hike in July, and the December increase may be delayed,” Sullivan said. US indices fell after the Federal Reserve raised its year-end inflation expectations and projected a rate hike to dampen that inflation.

The Brent Crude oil price continued to slide, and at 6pm NZ time yesterday it was trading at US$78.34 (NZ$135.34) a barrel. At home, the market was weighed down by the four leading stocks. Fisher & Paykel Healthcare eased 7c to $38.78; Meridian Energy decreased 10c or 1.72% to $5.72; and Auckland International Airport was down 9c to $8.55. Infratil, announcing two new Australia-based directors, Tiffany Fuller and Brad Banducci (former Woolworths Group chief executive), shed 5c to $14.80.

Elsewhere in the energy sector, Mercury was down 11c to $6.75, and Contact shed 12c to $9.54. Mainfreight declined $1.77 or 2.78% to $62; Ryman Healthcare decreased 4 c or 1.72% to $2.28; AFT Pharmaceuticals was down 6.5c or 1.7% to $3.76; Oceania Healthcare eased 1.5c or 2.03% to 72.5c; and SkyCity fell 2c or 3.74% to 51.5c following its recent strong run. Some technology stocks were again weaker. Eroad declined 4c or 3.77% to $1.02; Blackpearl Group was down 2.5c or 4.2% to 57c; and TradeWindow shed 0.004c or 2.3% to 17c. However, Vista Group increased 7c or 3.07% to $2.35, and Gentrack rebounded 15c or 4.08% to $3.83.

The dual-listed banking groups had a mixed day, with ANZ up 86c, or 2.06%, to $42.62 and Westpac down 69c to $42.61. A2 Milk increased 16c or 2.19% to $7.48; Synlait was up 2c or 4.88% to 43c; Comvita rose 3.5c or 5.19% to 71c; and PGG Wrightson gained 4c or 1.92% to $2.12 – companies that serve the booming primary sector.

Port of Tauranga was back at its all-time high, up 16c, or 1.93%, to $8.45. Air NZ, down 1c or 2.22% to 44c, reported a 0.3% drop in total passengers carried to 1.135 million in May. Domestic passengers were up 0.1% to 726,000 compared with the same month last year; Tasman/Pacific passengers were down 1.5% to 268,000; and long haul was up 0.2% to 141,000. The national airline said group revenue per available seat kilometre improved 2.7% year-on-year, with long-haul up 5.9% (mainly reflecting reduced capacity), domestic up 0.1%, and Tasman/Pacific up 0.4%.

NZX, unchanged at $1.44, told the market that CMC Markets Stockbroking has been accredited as a trading and advising participant. With an office in Auckland, CMC Markets will provide a full-service offering to retail and institutional investors wanting to invest in New Zealand-listed companies.

Source: Business Desk

Ahead of the local open SPI futures were 0 points lower at 8941.

- close [Morningstar with AAP]: Australia's share market has broken a four-session winning streak, after US interest rate worries hit risk sentiment, despite oil prices continuing their decline.

The S&P/ASX200 fell 55.2 points on Thursday, down 0.62 per cent, to 8,911.1, as the broader All Ordinaries lost 59.1 points, or 0.64 per cent, to 9,126.8.

Oil fell to its lowest price since March 2, the day markets opened after the US and Israel launched air strikes on Iran, ultimately sparking the biggest energy supply shock in history.

The slump wasn't enough to keep the Australian raw materials sector's recent run alive, after a US Federal Reserve meeting foreshadowed US interest rate hikes, lifting the greenback but weighing on metals prices and global growth hopes.

"Major miners remain caught between longer-term demand themes and near-term macro pressure, leaving the sector vulnerable to further swings in commodity prices, the U.S. dollar and China-related headlines," Vantage senior market analyst Hebe Chen told AAP.

Gold stocks' recent rally came to an end as the precious metal eased to $US4,300 ($A6,115) an ounce, dragging the gold sub-index 1.8 per cent lower.

Mega-cap miners BHP, Rio Tinto and Fortescue fell behind, tracking with weaker base metal prices, while battery minerals and rare earths producers also dipped.

The financials sector also lost ground, with three of the big four banks trading lower as investors reassessed their exposure to interest rate-sensitive stocks.??

"A higher-for-longer rate environment can help protect net interest margins, but it also risks softening credit demand and putting more pressure on borrowers, leaving the major banks facing a more uncertain near-term backdrop," Ms Chen said.

The energy sector tumbled 1.2 per cent as fading oil prices weighed on Woodside and Santos, while coal producers and most uranium stocks also lost ground.

Investors sought cover in more defensive sectors, consumer staples and health care outperforming and making two of only three segments to end the session higher.

Industrials was the third, thanks in part to decent performances from Transurban, Computershare and SGH, which jumped 2.7 per cent after investment group Morgans was impressed its recent investor day.

In company news, Qantas shares ended the session only marginally better than flat, after pushing back the launch date for its super long-haul Sydney-to-London route to October 2027.

Despite the broader downturn, the picture for Australian equities was constructive, Global X senior investment strategist Marc Jocum said.

"Importantly, this looked more like healthy consolidation than panic selling," he said.

"While Australia paused for breath, several Asian markets, including Japan and South Korea, continue to push towards or reach fresh record highs, suggesting risk appetite hasn't disappeared entirely but is simply becoming more selective."

The Australian dollar is buying 70.38 US cents, down from 70.58 US cents on Wednesday at 5pm.

ON THE ASX:

The S&P/ASX200 fell 55.2 points, or 0.62 per cent, to 8,911.1

The broader All Ordinaries lost 59.1 points, or 0.64 per cent, to 9,126.8

The NZX 50 added 14.07 points (0.11%) to 13377.38

[Morningstar with Dow Jones]:

U.S. stocks ended higher. The DJIA gained 0.1% to 51,564.70, the S&P 500 climbed 1.1% to 7,500.58 and the Nasdaq lifted 1.9% to 26,517.93.

Among S&P 500 companies, the top three gainers were SanDisk Corp SNDK surging 11.54%, Corning Inc GLW jumped 11.13%, and Intel Corp INTC lifted 10.64%.

The biggest decliners were Accenture PLC ACN which dropped 17.02%, Cognizant Technology Solutions Corp CTSH fell 10.55%, and The Kroger Co KR lost 8.40%.

Asia

Chinese shares closed mixed. The benchmark Shanghai Composite Index dropped 0.4% to 4,090.48 and the Shenzhen Composite Index climbed 0.5% to 2,853.37.

Hong Kong shares ended lower. The benchmark Hang Seng Index dropped 1.6% to 23,924.81.

Japanese shares ended higher. The Nikkei Stock Average added 1.6% to 71,053.49.

India shares ended higher. The BSE SENSEX rose 0.3% to 77,409.98.

Europe

Stocks in the U.K. finished lower. The FTSE 100 Index slipped 1% to 10,399.70. In Europe, shares closed higher. The Germany's DAX climbed 0.4% to 25,026.80, and the France's CAC 40 lifted 0.4% to 8,467.98