Market close: Investors take a breather as eyes turn to US inflation rate

The New Zealand sharemarket lost the fire in its belly as it keeps an eye on the latest United States inflation rate that could cause the Federal Reserve to make a sudden turn on economic support.

The S&P/NZX 50 Index fell 96.49 points or 0.75 per cent to 12,771.83, a day after having its biggest one-day gain of the year at 2 per cent.

Investors took a breather, with 42.83 million shares worth $148.8 million changing hands, and there were 53 gainers and 84 decliners over the whole market.

Mark Lister, head of private wealth research with Craigs Investment Partners, said markets were sitting back and watching how interest rates and inflation plays out, as well as the omicron Covid variant.

The US November inflation rate, due Saturday morning (NZ time), is expected to hit 6.7 per cent following the October rate of 6.2 per cent, the highest since 1990. New Zealand’s inflation rate is running at 4.9 per cent and is expected to be near 6 per cent in the December quarter.

Lister said “the US inflation rate could go close to 7 per cent which will be unnerving. The Federal Reserve is meeting next week – it’s the last big event of the year – and it feels they will remove the economic stimulus more quickly.”

Pfizer and its partner BioNTech said a third dose of their Covid-19 vaccine neutralised the Omicron variant in lab tests.

Market leader Fisher and Paykel Healthcare drove the market down, falling 89c or 2.7 per cent to $32. Otherwise, there were few major movements.

Fletcher Building was down 10c to $7.08; Port of Tauranga lost 15c or 2.14 per cent to $6.85; Trustpower fell 14c or 1.89 per cent to $7.26; Genesis shed 8.5c or 2.84 per cent to $2.945; Infratil declined 8c to $8.10; Spark decreased 9c or 1.99 per cent to $4.43; and Chorus was down 6.5c to $6.985.

Livestock Improvement Corporation was the top gainer, rising 10c or 7.69 per cent to $1.40; a2 Milk increased 9c to $5.98; AMP gained 3c or 3.06 per cent to $1.01; and DGL Group climbed 16c or 6.4 per cent to $2.66.

Marsden Maritime Holdings collected 10c to $6.40; Gentrack was up 5c or 2.87 per cent to $1.79; Evolve Education gained 3c or 3.9 per cent to 80c; and Third Age Health Services increased 5c to $2.95.

Among the retirement village stocks, Ryman Healthcare gained 12.8c to $12.08; Summerset Group Holdings was down 20c to $12.90; and Arvida was unchanged at $1.92. Arvida told the market that the sale of three small Rangiora retirement villages is completed.

Sky Network Television rose another 3c to $2.39. Sky told the market that Vodafone TV was closing in September and those customers who use that service to watch Sky TV will be transferred from March next year.

Fonterra Shareholders’ Fund recovered the ground it lost the day before, rising 10c or 2.78 per cent to $3.70. The fund reduced its full-year earnings guidance to 25-35c a share, from 25-40c, on the back of an increase in the farmgate milk price guidance, resulting in pressure on margins. Farmers have also voted 85 per cent in favour of Fonterra Cooperative’s new capital structure.

Ebos Group went into a trading half to raise money for the A$1.17 billion ($1.23b) purchase of medical devices distributor LifeHealthcare, with operations in New Zealand, Australia and South East Asia. It is Ebos’ first investment in Asia, and LifeHealthcare would contribute A$110m-$114m operating earnings in 2023.

Ebos is making a A$642m share placement, followed by a A$100m offer to existing shareholders. In a trading update, Ebos said revenue increased 10.6 per cent, operating earnings (ebit) 13.1 per cent and net profit was up 14.2 per cent for the four-month ending October. Ebos last traded at $36.50.

Cancer diagnostics company Pacific Edge gained 1c to $1.33 after completing his first major commercial agreement in Australia with Northern Health, servicing Melbourne’s outer northern suburbs.

Property for Industry has sold its Wellington Seaview property for $10m and its share price declined 5c to $2.84. Argosy Property was down 2.5c to $1.485; Investore fell 6c or 3.14 per cent to $1.85; Goodman Property Trust shed 4c to $2.55; and Kiwi Property decreased 2.5c or 2.12 per cent to $1.155.

Other decliners were Serko, down 19c or 2.75 per cent to $6.71; Synlait Milk shedding 14c or 4.03 per cent to $3.33; Scales Corporation falling 13c or 2.32 per cent to $5.47; and TradeWindow down 4c or 2.33 per cent to $1.68.

NZ King Salmon Investments was up 1c to $1.38 after increasing its 2022 operating earnings (ebitda) forecast to $10.5m-$12.5m, from $8m-$10m. The company said it is having continued improvement in fish size because of the change in farming model.

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