Market close: Global sharemarkets in sell-off as US Fed indicates higher rate hikes needed to fight inflation

Federal Reserve chairman Jerome Powell sent markets into a spin. Photo / Getty Images

The fight against inflation is far from over. Global sharemarkets, including New Zealand’s, sold off sharply after the United States Federal Reserve indicated interest rates may need to go higher for longer.

Following offshore leads, the S&P/NZX 50 Index fell at the opening and then traded steadily to close at 11,855.54, down 64.02 points or 0.54 per cent.

There were 60 gainers and 76 decliners on the main board with 24 million shares worth $117.14 million changing hands.

US Federal Reserve chair Jerome Powell told the Senate Banking, Housing and Urban Affairs Committee that recent economic data had come in stronger than expected and the ultimate level of interest rates is likely to be higher than previously anticipated.

“If the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes,” Powell said.

His statement immediately sent Wall Street into a spin and analysts were now predicting a 50 basis points increase in rates when the Federal Reserve meets in a fortnight. The Fed raised rates by 25 basis points at its February meeting.

The Dow Jones Industrial Average fell 574 points or 1.72 per cent to 32,856.46 points; S&P 500 declined 1.53 per cent to 3986.37; and Nasdsaq Composite was down 1.25 per cent to 11,530.33.

The sell-off brought Dow Jones into negative territory this year, down 0.88 per cent, while the S&P is up 3.83 per cent and Nasdaq increasing 10.16 per cent.

The Australian S&P/ASX 200 Index had fallen 0.83 per cent to 7303.8 points at 6pm NZ time, and the Hong Kong Hang Seng Index was down 2.33 per cent to 20,056.04.

Jeremy Sullivan, investor adviser with Hamilton Hindin Greene, said offshore sentiment drove the local market.

“Powell basically said US employment data was too strong, inflation was too persistent and the terminal cash rate may need to be higher - so interest rate expectation ticked up again.

“New Zealand still has its inflationary pressures,” Sullivan said. “Seek has more job openings, indicating more employers are hiring than firing and the labour market remains tight. Cyclone Gabrielle will be inflationary with insurance money coming into circulation.”

Pushpay Holdings was up a further 5c or 4.07 per cent to $1.28 after announcing that the Sixth Street and BGH Capital consortium is exploring a potential alternative takeover proposal and the deadline to call another shareholders meeting has been extended to next Monday.

Otherwise, either party can terminate the scheme implementation arrangement that saw substantial shareholders Sixth Street and BGH Capital bidding to take over Pushpay at $1.34 per share.

Sullivan said there is potential for a higher takeover offer and fingers crossed that shareholders do get a higher price out of it.

Ebos Group gained 25c to $45.25 on trade worth $23.4m and Freightways increased 12c to $9.69, but they received little support.

Market leader Fisher and Paykel Healthcare was down 7c to $26.08; Mainfreight shed $1.30 or 1.77 per cent to $72.20, a2 Milk decreased 6c to $7.34; Auckland International Airport was down 7c to $8.61; Fletcher Building gave up 9c or 1.9 per cent to $4.65; and Spark declined 6.5c to $4.955.

In the energy sector, Meridian declined 7.5c to $5.18; Mercury was down 6c to $6.42; and Manawa gained 9c or 1.84 per cent to $4.98. Infratil decreased 15c or 1.72 per cent to $8.55.

Ryman Healthcare was down 15c or 2.68 per cent to $5.44 as its retail rights offer came to an end. Ryman raised $237m with 66 per cent of retail shareholders taking up the offer at $5 a share, and it went into a trading halt till Friday while it completed a bookbuild on the shortfall of 25 million new shares.

Ventia Services fell 11c or 4.28 per cent to $2.46; Goodman Property Trust was down 5c or 2.36 per cent to $2.07; AFT Pharmaceuticals decreased 11c or 2.93 per cent to $3.64; and Bremworth declined 2.5c or 6.25 per cent to 37.5c.

Geneva Finance decreased 2c or 4.88 per cent to 39c; Seeka declined 5c to $2.95; Cooks Coffee was down 1.5c or 4.41 per cent to 32.5c; and My Food Bag slipped a further 1.5c or 5.77 per cent to 24.5c.

Napier Port rebounded 15c or 5.56 per cent to $2.85; Port of Tauranga was up 5c to $6.25; and Marsden Maritime Holdings was down 10c or 1.79 per cent to $5.50. Move Logistics decreased 2c or 1.87 per cent to $1.05.

Among the gainers, MHM Automation was up 4c or 4.65 per cent to 90c; Rakon added 3c or 3.26 per cent to 95c; Briscoe Group collected 9c or 1.93 per cent to $4.76; The Warehouse Group was up 4c to $2.57; Sanford improved 9c or 2.27 per cent to $4.06; and Synlait Milk increased 7c or 2.15 per cent to $3.33.

TruScreen, gaining 0.001c or 3.13 per cent to 3.3c, has received an order of 40 cervical cancer screening devices from its China distributor Beijing Siweixiantai Tech Co for installation into the public health check sector.