Sharemarket slips in line with global markets as Fed decision looms

Tuesday, 14 December 2021

The sharemarket fell in line with global markets as investors look ahead to the Federal Reserve's economic and interest rate policy update in the United States this week.

The benchmark S&P/NZX 50 Index dropped 64.596 points, or 0.5 per cent, to 12,929.59 on Tuesday.

“The market has definitely been influenced by what’s happened internationally,” said Craigs Investment Partners investment adviser Peter McIntyre. “Omicron and what’s going to happen with interest rates in the US is really driving market sentiment at the moment.”

Markets expect the Federal Reserve will announce plans to accelerate its timetable for reducing bond purchases aimed at keeping long-term interest rates low, at its meeting on Wednesday.

* NZX50 shrugs off Reserve Bank rate rise with a 0.6 per cent gain

* S&P/NZX50 Index slips 0.2 per cent despite Wall Street's record gains

Investors are cautious ahead of the Federal Reserve meeting on Wednesday.

“There’s no doubt that the tapering is going to ease or stop, it’s just when interest rates start to rise,” McIntyre said. “The market has got some of it priced in, but it’s finely balanced.”

A surprise announcement could be negative for equity markets internationally, he said.

“There’s some caution in the market today,” McIntyre said, noting New Zealand was trading in line with weaker markets across Asia.

On the local market, Air New Zealand said it has revised its Crown loan agreement in light of ongoing uncertainty around Covid-19, resulting in an additional $500 million in available funds, taking its overall support from the Government to $2 billion.

The airline is still targeting a capital raise for the first quarter of next year, but a further delay could be considered if unexpected events were to occur in 2022 that required further support, it said.

Air New Zealand shares fell 1.6 per cent to $1.56, although McIntyre said the decline was in line with weaker travel and airline stocks overnight.

Contact Energy and Meridian Energy both indicated in monthly updates that retail volumes were higher in November and that they had high water storage levels. Contact advanced 0.9 per cent to $7.79 while Meridian shed 1.7 per cent to $4.60.

Sky Network Television gained 4 per cent to $2.62 after the pay-TV company last week doubled its profit guidance for the year.

“It continues to get investor support,” McIntyre noted.

Retirement village stocks gained with Ryman Healthcare up 0.8 per cent to $12.45, and Summerset Group up 0.8 per cent to $13.35.

Units in the Fonterra Shareholders’ Fund slid 2.3 per cent to $3.75 after the fund’s chairman John Shewan told its annual meeting on Monday that the co-operative should have bought out the fund because it had run its course.

The fund gives non-farmers access to the co-operative’s dividends and under proposed changes the cap on its size will be reduced and farmers will no longer be able to freely trade their shares for units.

Sanford fell 4.2 per cent to $5.08. The seafood company told shareholders last month that it would not be paying final dividends as Covid-19 pushed profits down for a second year.

Transport company Mainfreight slipped 2.4 per cent to $92.69, as some investors took advantage of its 4.7 per cent gain on Monday to crystallise profits.

Move Logistics was the top stock traded by volume after a parcel of 10.4 million shares changed hands at $1.60 apiece. The stock ended down 1.2 per cent at $1.63 with a total of 10.5 million shares traded.

McIntyre said there had been a lot of interest in the company which had rejigged its board and management.

Mobile phone marketing company Plexure jumped 9.7 per cent to 51 cents after announcing it is laying off 55 staff in a restructure that will save the business $8m a year.

- With AP