MARKET CLOSE: NZ shares join global slide on Fed views; Xero, Sky TV, Fletcher drop

New Zealand shares fell, joining a global slide on growing speculation the US Federal Reserve will raise interest rates from near zero this month. Xero, Sky Network Television and Fletcher Building declined.

The S&P/NZX 50 Index dropped 17.64 points, or 0.29 percent, to 6125.67. Within the index, 27 stocks fell, 15 rose and 8 were unchanged. Turnover was $128 million.

Overnight, Federal Reserve Chairwoman Janet Yellen implied she will raise short-term interest rates at the next Fed meeting this month, barring a surprise that shakes her confidence in the economy. On Wall Street, the Standard & Poor's 500 Index shed 1.1 percent, while in Asia today, the S&P/ASX 200 Index fell 0.7 percent, Hong's Kong's Hang Seng fell 0.3 percent and Japan's Nikkei 225 fell 0.2 percent.

"People are watching and on tenterhooks about what will happen," said Mark Lister, head of private wealth research at Craigs Investment Partners. "We had some negative leads from offshore, and people are just looking ahead a couple of weeks to when the US is expected to raise interest rates. There were some comments overnight that suggest that it is still likely to happen, global markets reacted negatively and New Zealand's followed suit."

Xero led the index lower, falling 4.4 percent to $18.15, a one-month low. The shares have risen 18 percent so far this year, though prices have declined for the past week after the founder and directors sold 2.5 million shares between them.

"When you've got a bit of caution or uncertainty, it tends to be the riskier, more volatile stocks that feel the brunt of that," such as Xero, Lister said. Xero may also have suffered in the face of a stronger kiwi dollar this week, as "maybe some of those stocks that have got an export focus have been sold down a little."

Sky TV, which buys much of its programming in US dollars, dropped 1.8 percent to $4.47, while Air New Zealand, which buys jet fuel in US dollars, dropped 0.9 percent to $2.755.

Ryman Healthcare was the strongest performer on the day, up 2.4 percent to $8.04. The shares have risen 7.8 percent since Ryman's annual meeting in November, when it announced a 23 percent gain in first-half profit as revenue increased from a bigger asset base and it lifted the value of properties.

Fletcher Building dropped 1.4 percent to $7.24. Government data today showed residential building activity rose in the third quarter, offsetting a decline in non-residential building and pushing overall activity on a trend basis to the highest level in 10 years.

Tenon rose 3 percent to $2.73. Shareholders were told the first US interest rate rise in nine years, expected later this month, is only likely to cause a short-term slowdown in the recovering house construction market at today's annual meeting. The Taupo-based firm derives 90 percent of revenue from the US where the housing sector has rebounded after a lengthy slowdown following the sub-prime mortgage crisis and global financial crisis.

(BusinessDesk)