New Zealand stocks hit near two-week low tracking global peers

New Zealand shares fell to a near two-week low on Monday following a broader sell-off in Asian markets, as hot U.S. jobs data last week stoked fears of a Federal Reserve interest rate hike and investors pulled out of AI-linked stocks.

The benchmark S&P/NZX 50 index fell 0.9% to 13,038.24 points in its worst session since May 20. The index had fallen as much as 1.6% earlier in the session.

Australian market was closed for a holiday.

“Some very weak American markets on Friday have led somewhat of a sell-off in other Asian markets,” said Grant Williamson, investment adviser at Hamilton Hindin Greene.

Asian markets slumped, tracking heavy losses in tech stocks on Wall Street on Friday, driven by fears of overvaluation after a strong May jobs report fanned concerns of a Fed rate hike by when it meets next week.

New Zealand’s central bank kept the official cash rate unchanged at 2.25% at its May meeting, but signalled sooner and steeper rate hikes to counter inflation as energy costs rise due to the U.S.-Israeli conflict with Iran.

“We certainly will see an interest rate rise when the Reserve Bank meets next,” Williamson said, adding that the Reserve Bank of New Zealand will look past inflation somewhat if there is a solution in the Middle East.

Swaps imply a nearly 75% chance of a hawkish move at the RBNZ’s next meeting on July 8, while there is an over 60% probability of a rate hike to 2.75% in September.

Losses were led by utilities and industrial stocks. Meridian Energy shed 2.4% in its worst session in a month.

Renewable electricity provider Mercury NZ lost 2.3% in its biggest fall since May 20.

Capping losses, A2 Milk and EBOS Group gained 3.3% and 1.9%, respectively.