Kiwi flies on stonking inflation

The New Zealand dollar climbed about half a US cent after inflation data ratcheted up pressure on the Reserve Bank of NZ (RBNZ) to raise interest rates more aggressively.

Monday, October 18th 2021, 6:33PM

by BusinessDesk

Economists expect the central bank will take its foot off the accelerator in an effort to rein in the 4.9% annual pace of inflation in the September quarter, with traders pricing in a 50% chance of the RBNZ hiking the official cash rate half a percentage point to 1% in November.

“It was a stonkingly strong print,” said Imre Speizer, head of NZ strategy at Westpac. “The kiwi didn’t get that much of a bounce out of it, but when the offshore market jump in, I can see the Europeans and Americans taking it back above 71 US cents.”

The NZ dollar traded at 70.79 US cents at 3pm in Wellington from 70.36 cents on Friday, its highest level in more than three weeks.

The strong currency was felt on the S&P/NZX 50 Index, with exporters leading the benchmark lower as it fell 13.68 points, or 0.1%, to 12,998.51.

Vista Group International, which has customers in more than 110 countries, led the local index lower, falling 4.3% to $2.43.

Among other exporters on the benchmark index to decline, A2 Milk fell 1.7% to $6.96, Restaurant Brands was down 1.3% at $15.53, while those outside the top 50 were also hit, with ArborGen down 5.3% at 27 cents, Scott Technology falling 4.5% to $2.77, and Rakon declining 3.7% to $1.56.

Grant Davies, an investment adviser at Hamilton Hindin Greene, said the local market underperformed its peers across Asia, which were buoyed by a strong lead from New York on Friday, in what was a relatively quiet day with a turnover of $127.5 million across the main board.

Mainfreight posted the biggest gain in the top 50, up 2.4% to $89.35. The global logistics firm today announced the resignation of Craig Evans, who leads its NZ operations, in January.

He’s been with the company since 1987. Pacific Edge rose 1.5% to $1.40. Its $20m retail offer closed today after receiving $80m of applications, and it accepted $3.5m of oversubscriptions.

Stock market operator NZX rose 1.2% to $1.75 with a couple of new listings on the cards.

Vulcan Steel lodged its product disclosure statement on Friday in its plans for a dual-listing in a A$372m initial public offering, while Greenfern Industries will join the local bourse in a compliance listing on Thursday.

Steel & Tube Holdings rose 1.8% to $1.14, Rua Biosciences advanced 1.2% to 41 cents, and Cannasouth was unchanged at 40 cents. T&G Global was unchanged at $2.95 after warning of a disappointing outlook for the rest of the calendar year.

Arvida Group was among the most traded stocks of the day, up 1% at $2.10 with 2.4 million shares changing hands. The retirement village operator last week unveiled plans to buy six villages for $345m, part-funded by a $330m capital raising.

Tags: Market Close