Market close: Bond yields rise as creeping uncertainty weighs on stocks

Mainfreight added $2.30 or 3.1 per cent to $76.40. Photo / Supplied

The New Zealand sharemarket slipped half a per cent as bond yields suddenly rose and uncertainty crept back onto Wall Street. But Mainfreight was again the stand-out stock.

After the weak day on Wall Street, the S&P/NZX 50 Index fell at the opening and never recovered, closing at 12,128.98 – down 68.17 points or 0.56 per cent.

There were 62 gainers and 77 decliners on the main board with 49.06 million shares worth $169.86 million changing hands – the second-highest volume this year.

The cause of uncertainty was the red-hot January jobs report released in the United States on Friday, renewing investor fears that the Federal Reserve will need to be more aggressive to tame inflation.

Jeremy Sullivan, investment adviser with Hamilton Hindin Greene, said “we have seen a sharp rise in bond yields over the past two trading days and a weakness in the technology stocks.

“Our market has had a strong rally since the start of the year and we are seeing some profit-taking as we go through the US and New Zealand reporting season,” he said.

The US 10 Year Treasury Note yield jumped 21 basis points to 3.624 per cent, its highest level in more than a month, after the latest labour market report showed 517,000 jobs were created in January, well above the expected 175,000. The unemployment rate fell to 3.4 per cent, the lowest since 1969.

The jobless rate at a 53-year low goes against the moves by technology companies to lay off staff and prepare for the expected economic downturn. So far, they have announced a total of 78,150 lay-offs, the latest being Dell which is shedding 6650 staff.

The Nasdaq Composite was down 1 per cent to 11,887.45 points and the S&P 500 declined 0.61 per cent to 4111.08.

Investors will be closely following Federal Reserve chair Jerome Powell’s speech to the Washington Economic Club overnight, and look for hints on future interest rate rises.

The Australian Reserve Bank lifted its official cash rate 25 basis points to 3.35 per cent – its ninth consecutive increase since May last year when the rate was at an historic low of 0.1 per cent.

Global transport and logistics company Mainfreight added $2.30 or 3.1 per cent to $76.40 and has risen more than 8 per cent in the last two trading days. Mainfreight is providing a trading update on Thursday in a sector that has become more settled.

Fisher and Paykel Healthcare was down 22c to $26.07; Ebos Group declined 39c to $43; Fletcher Building shed 15c or 2.73 per cent to $5.35; Auckland International Airport decreased 10c to $8.47; and Ryman Healthcare fell 40c or 5.97 per cent to $6.30.

One broker put out a note saying it is still concerned about Ryman’s level of debt. Ryman’s share price increased 16 per cent over the last quarter.

The property sector was weaker with the rise in bond yields. The NZ 10 Year Government Bond yield went over 4 per cent to 4.082 per cent. Argosy decreased 3.5c or 2.98 per cent to $1.14; Precinct declined 3c or 2.36 per cent to $1.24; Goodman Trust was down 3c to $2.10; and Vital Healthcare Trust shed 2c to $2.47.

In the energy sector, Mercury was down 7.5c to $6.295; Vector declined 13c or 2.97 per cent to $4.24; and Manawa was up 5c to $5.57. Infratil shed 11c to $8.87.

Genesis, down 5c to $2.79, is developing solar generation on a 90h site on the Canterbury Plains in conjunction with joint venture partner FRV Australia. The site will have 80,000 solar panels and generate 80GWh of renewable electricity annually – enough to power nearly 10,000 homes.

SkyCity Entertainment declined 4c to $2.53 as investigations continue into the operation of its Adelaide casino. The South Australian Consumer and Business Services independent review is on hold until the resolution of the civil penalty proceedings filed by Australian Transaction Reports and Analysis Centre.

Winton Land, down 2c to $1.92, has downgraded its full-year net profit guidance to $72.4m-$82.4m, from its initial public offer forecast of $98.9m because of the disruption caused by the heavy January rainfall. The net profit for the 2022 financial year was $31.7m. Winton has no debt and cash of $89m.

Other decliners were Tourism Holdings down 11c or 2.82 per cent to $3.79 Synlait Milk decreasing 7c or 1.97 per cent to $3.48; MHM Automation shedding 2c or 2.25 per cent to 87c; Ventia Services down 8c or 3.03 per cent to $2.56; and NZ Oil & Gas down 3c or 6.59 per cent to 42.5c.

Restaurant Brands increased 15c or 2.34 per cent to $6.55; a2 Milk was up 7c to $7.55; Rakon improved 3c or 2.86 per cent to $1.08; and Tower added 1.5c or 2.29 per cent to 67c.

Green Cross Health was up 4c or 3.05 per cent to $1.35; NZ King Salmon Investments improved 1.5c or 7.32 per cent to 22c; Smartpay added 3c or 2.31 per cent to $1.22; and ikeGPS collected 2c or 2.02 per cent to $1.01 after telling the market it increased revenue 134 per cent to $23.3m in the nine months ending December.