Shares up as RBNZ defers rate hike

New Zealand shares rose this afternoon as investors welcomed an extra six weeks of low interest rates with the Reserve Bank leaving monetary policy settings on hold.

Wednesday, August 18th 2021, 7:20PM

by BusinessDesk

The S&P/NZX 50 Index rose 83.56 points, or 0.7%, to 12,718.88. Turnover was high at $302.8 million.

The benchmark index had already been trading higher but jumped another 30 points after the central bank’s 2pm announcement.

Market interest rates dropped on the news but quickly recovered and were trading higher by later afternoon, as traders digested the bank’s commentary which suggested the official cash rate will still need to be hiked.

The kiwi dollar saw the same whiplash, falling as low as 68.74 US cents before bouncing straight back, trading between 69.30 cents and 69.50 cents throughout the afternoon.

“As the tea leaves were viewed more closely, it became obvious the general thrust of the document was in fact more hawkish than widely anticipated, so a grand reversal took place,” said Stephen Toplis, BNZ’s head of research.

The central bank's monetary policy committee still intends to end “emergency levels of monetary stimulus” but decided sometime in the past 24 hours to hold off while the country was in lockdown.

A number of reliable dividend-paying stocks saw a brief share price bump after the announcement, but ongoing earnings results and lockdown themes appeared to be more influential.

Two stocks that saw a rush of demand during the March 2020 lockdown were among the strongest performers today.

Stock market operator NZX led the index higher as it rose 2.8% to $1.85, while meal-kit company My Food Bag – which saw its revenue jump 20% during 2020 – rallied 3.1% to $1.34 today.

Another pandemic beneficiary, Fisher & Paykel Healthcare rose 2.4% to $33.24 even after it reported a small drop in revenue at its annual general meeting today.

The respirator part manufacturer said revenue had fallen 2% in the first four months of its financial year and it was unable to give full year guidance due to the pandemic.

Much of this drop came from lower hospital hardware sales in Europe and North America where vaccination is bringing covid under control. However, it was largely offset by increased sales of other products such as sleep apnea masks and consumable products.

Shares in Ebos, another health stock, jumped 1.9% to $32 after it reported another record profit and lifted its annual dividends by 14%.

Fletcher Building fared less well, dropping 1.6% to $7.63 despite beating its own earnings guidance with a net profit of $305m, up from a $196m loss the previous year.

The company, which has put investors through years of losses and unpleasant shocks, will pay a final dividend of 18 cents per share on Sept 17, taking the annual payout to 30cps

Even after the share price decline today the stock is still up more than 30% year-to-date and has more than doubled since August last year.

Spark NZ finished the day up half a percent at $4.755 having reported an 8.6% decline in full year net profit, at $384m, earlier this morning.

The strong dividend payer's share price briefly spiked above $4.81 at 2pm before settling back. Spark’s board declared a final dividend of 12.5cps, taking the annual payout to 25cps, unchanged from the year earlier.

Shares in Hallenstein Glasson jumped 3.2% to $6.88 as it quickly bounced back from a sell off yesterday afternoon and this morning.

The fashion retailer has had to close all its NZ stores under alert level 4 rules, although its online store continues trading for essential items.

Tags: Market Close