KMD Brands tumbled amid chatter of a recapitalisation.
New Zealand’s S&P/NZX 50 index fell for a third week in a row as the escalating conflict in the Middle East drives up fuel costs, and as bond markets start betting on upcoming rate hikes from the Reserve Bank to quell any inflationary pressures.
Central bank governor Anna Breman will provide some guidance on where the Reserve Bank’s moving when she delivers a speech next week, getting strong leads from her peers in the US, Europe, Japan and Australia, who all reviewed policy this week.
KMD Brands was the weakest performer on the week after reports emerged across the Tasman that the retailer tapped Goldman Sachs to help it shore up its balance sheet at a time when the share price is trading at all-time lows.
The NZX50 dropped below 13,000 for the first time since August as it declined on Friday, with heavyweight companies such as Fisher & Paykel Healthcare, Contact Energy and Precinct Properties NZ the biggest drags as index reweightings drove heavy trading by large funds that track those benchmarks.
The NZX50 dropped 61.62 points, or 0.5%, to 12,989.99 on Friday, taking the weekly decline to 1.5% this week.
Global markets have been on edge as the conflict in Iran escalated through the week with attacks on energy infrastructure triggering new spikes in oil prices, although some of that heat subsided when US President Donald Trump said he wouldn’t send troops on the ground in Iran, while Israeli prime minister Benjamin Netanyahu said his forces would refrain from more attacks on Iranian energy infrastructure.
Brent crude oil futures fell 1.6% to US$106.89 a barrel at 5pm on Friday.
The surge in energy prices clouded the outlooks for central banks this week, with the Federal Reserve, European Central Bank, Bank of England and Bank of Japan among those keeping their benchmark rates on hold while keeping a watching brief on the impact of the Middle East conflict.
New Zealand’s Reserve Bank will review policy on April 8, with governor Breman refocusing a speech scheduled for Tuesday to conflict and its potential impact domestically.
Bond traders are pricing in rate hikes by central banks, and the yield on New Zealand’s 10-year government bond rose 7 basis points this week to close Friday at 4.74%, the highest it’s been since May last year.
“With the economy still in the doldrums, I can’t see the Reserve Bank taking any foolish kneejerk reaction moves of the OCR,” said Mark Lister, investment director at Craigs Investment Partners, referring to the official cash rate.
That changing macro environment weighed on interest-rate-sensitive tech stocks, with Serko and Vista Group International falling 14% over the week.
RBNZ governor Anna Breman.
KMD posted the sharpest fall in the week as it tumbled almost 20% in its biggest weekly drop since March 2020 when the covid-19 pandemic hit, ending the week at a fresh record low of 19 cents.
The retailer was sent lower when it confirmed it hired Goldman Sachs after a report in the Australian Financial Review’s Street Talk column said the investment bank had been tapped to run a recapitalisation for the owner of the Kathmandu and Rip Curl brands.
Broadband network operator Chorus posted the biggest weekly gain, rising 5.2% to end Friday at $9.66. That included a 2.6% gain on Friday.
The NZX50 was experienced heavy trading on Friday, with a turnover of $564.8 million in an extended session catering to index reweightings for the FTSE Russell and S&P/NZX indices.
Auckland International Airport increased 0.9% to $8.20 on a turnover of $79.1 million, while Fisher & Paykel Healthcare fell 2.2% to $36.41 on a turnover of $67.4 million, Ebos Group gained 1% to $21.86 on a value of $65.2 million, and Contact Energy decreased 2% to $9.06 with $55 million of shares traded.
Heartland Group Holdings rose 1.2% to $1.235 on turnover of $35.4 million.
Within the index, 27 stocks declined and 22 gained, with Genesis Energy in a trading halt for a shortfall bookbuild to make up the last $1.9 million of the renounceable rights offer.
Vulcan Steel led the NZX50 lower as it fell 5.3% to $7. Oceania Healthcare slipped 4.5% to 74 cents, and Precinct dropped 4.5% to $1.06.
Gentrack posted the biggest gain on the day, up 4.6% at $7.45, while ANZ Group Holdings advanced 2.5% to $45.95 and Tourism Holdings advanced 1.8% to $2.31.
The kiwi dollar rose to 58.83 US cents at 5pm in Auckland from 58.18 cents yesterday after Statistics New Zealand figures showed dairy exports fell in February, helping swing the trade balance into a deficit.
Reporting by Paul McBeth.
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