Market close: Spectre of rising inflation stalks NZ stocks

Weakness in Auckland international Airport shares helped drive the S&P/NZX50 index down. Photo / NZ Herald

New Zealand stocks ended weaker in line with offshore trends after the spectre of inflation reared its head in the US, driving bond yields up and Wall Street stocks down.

The S&P/NZX50 index ended at 12,428.12, down 137.79 points, or 1.1 per cent.

Turnover came to 35.39 million shares, worth $157.9 million.

There were 101 falls and 29 rises.

US stocks had suffered their worst losses in months while US government bond yields bumped up after data showed the US inflation rate jumped to a 13-year high, raising concerns that the Federal Reserve will be forced to tighten monetary policy.

Dan Stratful, investment adviser at Forsyth Barr, said the day's price action was in reaction to US markets.

US Treasuries have been ticking up but so too has the New Zealand 10 year swap rate - to 1.99 per cent from 1.8 per cent a month ago.

"That core inflation data out of the States was pretty strong," he said.

"There have been some big moves in bond markets - not just sharemarkets.

"Inflation is going to be an ongoing theme for the rest of the year.

"Whether inflation is temporary or whether it is here to stay is a real challenge for the market, going forward," Stratful said.

Rising inflation leads to higher interest rates, which generally not good for equity valuations.

Yield-sensitive market leader, Auckland International Airport (AIA) fell by 31 cents or 4 per cent at $7.42.

Stratful said AIA may be feeling the pressure from the bond market, but it was also starting to react to ongoing Covid-19 problems in Australia.

Goodman Property Trust eased despite reporting a 141.2 per cent lift in net profit to $631.7m, the units finishing at $2.26, down 5 cents or 2.1 per cent.

Stratful said a strong result had been factored in.

"It was a good all-round result from Goodman and gearing was at the lower end of the range - 22 per cent - which is quite low," Stratful said.

"Industrial property has been holding up better these days than most other asset classes."

Against the general trend, Fletcher Building - which has extensive interests in Australia - rose by 8 cents to $7.33 on the back of an increased infrastructure spend outlined in this week's Australian Budget.

Cinema software company Vista fell by 12c to $2.20 in line with weaker offshore tech stocks.

Topping the list of gainers was dual-listed Harmoney after reporting a big lift in lending to $37.8m in April - its strongest month on record - from $4.2m in April last year.

Harmoney - Australasia's largest online direct personal lender - now has more than $2 billion in loans out to customers.

The stock listed last November at a discount to its A$3.50 issue price and has struggled to perform ever since, trading on the ASX at A$1.75.

On the NZX, the stock finished at $1.94, up 18c cents or 10 per cent.

Takeover target Tilt Renewables - majority owned by Infratil - eased 1c to $8.00.

In what is likely to be its last annual result as a listed entity before being subsumed into Powering Renewables Australia Fund (PowAR) and Mercury NZ, Tilt said its operating profit fell by 36 per cent to A$74.9m, down from A$117.5m in 2020.

Infratil itself fell by 14c to $7.27.

Among the other yield-sensitive stocks, Mercury fell by 29c or 4.3 per cent to $6.46 and Hallenstein Glasson dropped 10c to $7.30.

Retirement village company and market leader Ryman fell by 20c, 1.3 per cent, to $14.75, partly reversing Wednesday's 50c gain.

Also bucking the trend was the market's biggest stock Fisher and Paykel Healthcare, which gained 25c to $33.55.

Among the smaller companies, Napier Port ended steady at $3.40 after Wednesday's 12 cent sell off.