Sharemarket reacts to falling fuel costs
The equity market pared losses after the government announced it would cut fuel taxes to counter a price spike caused by Russia’s invasion of Ukraine.
The benchmark S&P/NZX 50 index slid 0.1%, or 16.274 points, to 11,805.11 on Monday, having previously fallen 0.7% before the government announcement.
Prime Minister Jacinda Ardern has said the government will cut fuel taxes by 25 cents a liter over the next three months – and cut public transport fares in half. Charges for the use of diesel vehicles will be reduced by a similar amount, but this may not happen as quickly. This will also apply for three months.
“When the Prime Minister made his announcement, we actually got significantly stronger and Mainfreight, which was trading negative, turned positive,” said Peter McIntyre, investment adviser at Craigs Investment Partners.
* Sharemarket falters as investors spooked by tech firm Meta’s results
* Sharemarket lackluster as investors wary of Omicron, higher interest rates
* Sharemarket slips in line with global markets as Fed decision looms
Shares of the transportation and logistics company were trading as low as $75.11, but rebounded to around $77 after the government announcement and closed unchanged at $76.
Tourism Holdings, which rents and sells motor homes, rose 5.3% to $2.59, after jumping 9 cents, or 3.6% after the announcement.
McIntyre noted that many stocks are now trading without the right to their dividends, after the earnings season, which has dented investors’ appetite for stocks, especially in an uncertain environment.
“We’ve just gone through a reporting season where a number of companies have announced dividends, and a number of companies are trading ex-dividend,” he said.
Shares in this group included Contact Energy, down 0.6% at $7.88, Port of Tauranga, down 1% at $6.14, Freightways, down 1.5% at 11.43 $, Skellerup down 2.8% to $5.24, Summerset down 1.2%. at $11.16, and Vital Healthcare, down 1.4% at $3.115.
“Once their dividends are paid, their stock price tends to fall and that impacts our overall market situation,” McIntyre said.
“In this market, that’s another reason to get out with the volatility we’ve seen lately and obviously the news with Ukraine, Russia, inflation and interest rates.”
McIntyre said the 5-year swap rate, used by banks to move a loan from a floating rate to a fixed rate, rose to 3.2% from less than 3% last week, signaling that rates interest rates should rise to curb inflation. .
That means the real estate sector was the worst performer on Monday, he said.
Property for Industry fell 1.1% to $2.665, Stride Property fell 1% to $1.97, Investore Property fell 0.6% to $1.70 and Kiwi Property fell 1.9 % to $1.05.
“Generally it’s a pretty defensive sector of assets to own, but with interest rates rising and our market being quite interest rate sensitive, it just felt a bit of that pressure.”
Z Energy rose 1.1% to $3.67 after news that Ampol had reached an agreement to sell Gull New Zealand, to ease competition concerns surrounding its 1.97 takeover bid billion on Z Energy.