Market close: NZ shares slip as US inflation data looms

It's been a bumpy ride for the sharemarket this year. Photo / Greg Bowker

New Zealand shares declined on Friday as the local trading week came to a close before the release of US inflation data, which is due to come out later on Friday night.

The S&P/NZX 50 Index fell 75 points, or 0.7 per cent, to 11,136.28. Turnover was light at just $92.3 million.

Thin trading volumes today might be a sign that investors were unwilling to make big moves ahead of the important inflation data set to be released in the US over the weekend, which will help set the tone for central bank policy.

BNZ interest rate strategist Jason Wong said the consumer price index data is expected to show "inflation still running far too high for comfort".

"Given market sensitivity to inflation, a surprise in either direction could result in a significant reaction," he said in a note.

Oanda analyst Jeffrey Halley said median forecasts were for headline inflation to hit 8.3% and for core inflation to be 5.9 per cent, year-on-year.

"A number at 8.4 per cent or higher probably sparks a risk aversion sell-off across asset markets, with the US dollar winning," he said.

"Conversely, a print at 8.2% or lower probably sees a 'buy-everything, sell-dollars' rally, as Fed hiking expectations are pared."

In NZ, government bond yields were at a fresh multi-year high after the Reserve Bank of New Zealand gave some detail on its plans to sell down its stockpile of bonds.

RBNZ bought up government bonds during the pandemic to provide liquidity to the economy and push down interest rates. It will now sell those bonds at a rate of $5 billion per year, starting with the longest maturities and working back.

On the equities market, most stocks fell, but many did so with very light trading volumes.

Air New Zealand Limited declined 4.8 per cent to 59.5 cents – its lowest price since April 2020 – despite lowering its expected net loss for the current financial year this morning.

The airline said improving trends in travel bookings had shaved more than $50 million off the expected loss for the year to June 30, bringing it to "less than $750 million".

Fletcher Building fell 4.2 per cent to $5.21 as frustration grew with the company's inability to supply enough plasterboard to meet demand.

Some buyers, such as Simplicity Living, have begun importing their own supply from Thailand, declaring it had "fired" Fletcher.

Retailers Hallenstein Glasson Holdings fell 4 per cent to $5.70 and KMD Brands dropped 3.3 per cent to $1.16.

The kiwi dollar was trading at 63.97 US cents at 3pm in Wellington, down from 64.35 cents yesterday. The trade-weighted index was at 71.51, from 71.77 yesterday.

Oanda's Halley said trading was "ugly" overnight for the Aussie and Kiwi dollars, which both fell significantly against the US.

"A combination of US inflation concerns and renewed mass testing in Shanghai seem to have created a toxic risk sentiment cocktail for the Australasians. Both remain acutely vulnerable to negative developments on both fronts," he wrote in a note.