Market close: Inflation jitters hit sharemarket

Reserve Bank Governor Adrian Orr. ANZ Research predicted the Reserve Bank will hike the official cash rate 50 basis points. Photo / Mark Mitchell

Inflation jitters again hit the New Zealand sharemarket, sending it down less than half a per cent – and the national airline's price settled as rights trading began.

The S&P/NZX 50 Index had two dips, one at lunchtime and the other late in the day – and it finished at 12,079.3, down 42.09 points or 0.35 per cent.

There were 56 gainers and 76 decliners across the whole market, with 61.74 million shares worth $189.38 million changing hands.

Overnight, US Federal Reserve Governor Lael Brainard signalled tougher action to control inflation, dragging the major United States indices down. The Nasdaq Composite, whose technology stocks were having a revival, fell 2.26 per cent to 14,204.17 points.

At home, ANZ Research predicted the Reserve Bank will hike the official cash rate 50 basis points to 1.5 per cent next week following its monetary policy review.

ANZ said the Reserve Bank has a big job to do to rein in runaway inflation, and the sooner they rip into it, the lower the economic cost is likely to be. ANZ forecasts inflation to peak at 7.5 per cent.

Greg Smith, head of retail with Devon Funds Management, said there are so many moving parts such as a war, high commodity prices though they are coming down, and house prices going backwards.

"A 50 basis points rise feels a bit bullish, and the Reserve Bank did say they wanted to maintain optionality and were not proceeding on a predetermined path. But the more hawkish comments from the Federal Reserve, albeit from one person, would have rattled the cages," Smith said.

On the local market, Air New Zealand's ordinary shares fell 9c or 9.47 per cent to 86c, nearer to the theoretical ex-rights price of 77.5c. The rights were down 23c or 30.67 per cent to 52c, close to the reference price of 49c.

A total of 10.48 million rights worth $5.26m were traded. Air New Zealand sent a letter to shareholders further explaining the rights offer process.

Smith said there was a lot of retail investor interest in Air New Zealand, with the border reopening, and those investors had driven the price higher.

"I guess the retail buying has run out of steam and a dose of reality set in. The capital raising is complicated in itself and there are complications in the outlook for the national carrier. The share price has certainly come back to a more realistic level," he said.

Market leader Fisher and Paykel Healthcare was up 11c to $24.64; EBOS Group increased 79c or 1.95 per cent to $41.29; Chorus gained 9c to $7.39; Serko rose 18c or 3.77 per cent to $4.96; and Freightways collected 9c to $12.40.

Among the retailers, Hallenstein Glasson was up 18c or 2.78 per cent to $6.65; The Warehouse Group declined 6c or 1.83 per cent to $3.21; and Michael Hill International was down 3c or 2.36 per cent to $1.24.

Vector edged ahead 1c to $4.02 after telling the market it is reviewing its smart metering business following approaches from highly-credible organisations to partner and invest in the transtasman business. Vector services two million electricity and gas meters in New Zealand and Australia.

The dividend-paying energy stocks had a mixed day. Meridian fell 12c or 2.31 per cent to $5.08; Contact was also down 12c to $7.88; Mercury increased 3c to $6.12; Trustpower was up 16c or 2.26 per cent to $7.25; and Genesis gained 3.5c to $2.895.

Ventia Services Group increased 5c or 1.81 per cent to $2.81 after the Commonwealth Government awarded a two-year extension, through to June 2024, for its management services of more than 650 properties. The extension will generate $270m in revenue.

Smith said Ventia, with a total revenue of $5 billion, has a pipeline of $16b worth of contracts and its share price has increased 50 per cent since listing in late November.

Other gainers were Move Logistics, climbing 14c or 10.77 per cent to $1.44; Heartland Group Holdings, up 3c to $2.32; TradeWindow increasing 10c or 5.41 per cent to $1.95; and Napier Port collecting 5c to $3.

Auckland International Airport was down 9c to $7.70; Ryman Healthcare declined 14c to $9.06; T&G Global shed 9c or 3.01 per cent to $2.90; Livestock Improvement Corporation fell 7c or 4.05 per cent to $1.66; and Green Cross Health decreased 5c or 3.33 per cent to $1.45.

Sky Network Television was down 5c or 1.71 per cent to $2.88; Just Life Group fell 4c or 5.19 per cent to 73c; and Cannasouth was down 1.5c or 4.17 per cent to 34.5c.

NZ Automotive Investments, owner of 2 Cheap Cars, gained 1c to 88c. It earlier downgraded its full-year profit guidance because of the strengthening NZ dollar against the Japanese yen. Net profit is expected to be $2.3m-$2.7m, down from $3.2m-$3.6m.