MARKET CLOSE: Shares join regional sell-off as traders mull global rates

New Zealand shares fell, joining a sell-off across Asia-Pacific, as investors mull the impact of global monetary policy on long-term bond yields and how that will feed into equity markets.

The NZX 50 Index fell 43.332 points, or 0.8 percent, to 5122.743. Within the index, 26 stocks fell, 15 gained and nine were unchanged. Turnover was $116.9 million.

Stocks across Asia fell, following Wall Street lower, as traders weigh up whether major central banks are moving towards raising interest rates, which would lift yields on bonds and reduce the advantage equities have enjoyed in a zero interest rate environment. Japan's Nikkei 225 index was down 0.3 percent in afternoon trading, Hong Kong's Hang Seng fell 1.3 percent and Australia's S&P/ASX 200 index declined 1.1 percent.

"There's a bit of a feeling across equity markets that we're due for a bit of a pause," said Shane Solly, director, portfolio manager & research analyst at Harbour Asset Management. "People are wondering about the impact of interest rates and monetary policy, and what that means for long-term bond yields."

Property stocks, which are typically seen as offering a strong dividend yield, were mixed, with Goodman Property Trust down 0.9 percent to $1.075, Kiwi Income Property up 0.4 percent to $1.18, DNZ Property Fund unchanged at $1.635, and Property For Industry rising 0.4 percent to $1.34.

Harbour's Solly said the next piece of information investors are waiting for will be earnings season in August, when they will be able to assess their stock valuations.

Accounting software maker Xero led the benchmark index lower, down 3.9 percent to $25. Online auction site Trade Me Group paced the decline, falling 2.5 percent to $3.53 while pay-TV operator Sky Network Television slipped 2.4 percent to $6.59 and governance software developer Diligent Board Member Services decreased 1.9 percent to $4.12.

"Some valuation multiples have jumped up across the market and it's the more high-performing end of the market that's being trimmed back," Solly said.

Mainfreight fell 0.2 percent, or 3 cents, to $14.37 after the logistics group shed the right to its 19 cents per share dividend, payable on July 18.

Chorus fell 0.6 percent to $1.72 after the Commerce Commission put out a paper indicating its early view on what model to use when setting the regulated price for the telecommunications network operator's copper-line service. Telecom Corp, Chorus's biggest customer, slipped 0.6 percent to $2.675.

Fletcher Building, New Zealand's largest listed company, fell 1.6 percent to $8.86.

Warehouse Group rose 0.6 percent to $3.14, Kathmandu Holdings dropped 2.8 percent to $3.13, and Restaurant Brands gained 0.9 percent to $3.28 after government figures showed core retail spending on credit and debit cards slipped in June.

Fisher & Paykel Healthcare, which earns half its revenue in US dollars, fell 0.7 percent to $4.60 after the New Zealand dollar rose to a three-year high against the greenback after Fitch Ratings raised its outlook for New Zealand's sovereign credit rating.

Michael Hill International rose 2.3 percent to $1.33, adding to yesterday's 5.7 percent gain when jewellery chain said annual sales rose at their fastest pace in three years.

Mining company OceanaGold Corp was the biggest gainer on the NZX 50, up 3.2 percent to $3.55.

Energy Mad slumped 24 percent to 19 cents after the energy efficient light bulb maker and marketer yesterday said it had lost tax losses after a long-standing shareholder sold their stake.

(BusinessDesk)