Sharemarket slips as investors bet inflation will lead to higher

The sharemarket weakened as investors bet a sharp rise in inflation would lead to higher interest rates, weighing on company profits.

The benchmark S&P/NZX 50 Index slipped 13.678 points, or 0.1 per cent, to 12,998.51 on Monday.

Annual inflation jumped to 4.9 per cent in the September quarter, according to Stats NZ. That’s more than expected, and has stoked expectations for higher interest rates.

“Inflation was the big thing today. That was quite a strong number,” said Craigs Investment Partners adviser Peter McIntyre. “The sharemarket is a bit flat on expectations that interest rates are going to rise further over the next 12 to 18 months.”

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McIntyre said the technology and real estate sectors led the decline as higher debt would weigh on their costs, impacting earnings.

Among property stocks, Investore Property fell 2.1 per cent to $1.89, Argosy Property slipped 0.6 per cent to $1.605, Vital Healthcare Property Trust edged down 0.5 per cent to $2.925, Precinct Properties slid 0.6 per cent to $1.635, Property For Industry slipped 0.2 per cent to $2.945, and Goodman Property Trust dropped 0.2 per cent to $2.47.

Retirement village stocks, which are influenced by property valuations, also slid with Summerset Group down 1.3 per cent to $14.75 and Ryman Healthcare down 1.3 per cent to $14.80.

Among tech stocks, Vista Group fell 4.3 per cent to $2.43 and Pushpay dropped 1.1 per cent to $1.85.

Transport and logistics company Mainfreight was the most traded stock by value, with more than $10 million worth of shares changing hands.

Mainfreight rose 2.4 per cent to $89.35, taking its gain over the past year to 65 per cent, which McIntyre said was “a terrific run”.

The company’s shares have fallen 7.8 per cent so far this month and some investors saw good value in the stock at or below $90, he said.

T&G Global was unchanged at $2.95 after the fruit and vegetable grower and marketer warned its profit this year may fall by as much as 76 per cent as the Covid-19 pandemic disrupts its operations.

The company expects profit of between $4m and $10m this year, down from $16.6m last year.

Most of the company’s shares are held by large stakeholders with German firm BayWa owning about 74 per cent and Hong Kong’s Wo Yang holding just under 20 per cent.

McIntyre said trading was relatively quiet following the end of the school holidays.

Investors would be looking for trading updates from companies holding their annual meetings this week, including Fletcher Building, Ebos Group, Tourism Holdings and Auckland Airport, he said.

“The market is probably going…