NZ shares climb as investors absorb inflation data

New Zealand's sharemarket lifted on Thursday, despite US inflation data coming in hot and prompting discussion of the Federal Reserve hiking rates by 100 basis points.

Thursday, July 14th 2022, 5:51PM

by BusinessDesk

The S&P/NZX 50 Index rose 77.63 points, or 0.7%, to 11,187.97. Turnover was $106 million.

Inflation hit another new high in the US overnight, hitting 9.1% year-on-year ahead of market expectations for an 8.8% increase.

One member of the US Fed’s open market committee said there was “no good news” in the data, and another said the central bank could consider a 100-basis point rate hike.

Despite these headline-grabbing reports, the market reaction was relatively muted.

Key US equity indices fell about half a percent, and bond traders priced in a 50% chance of the big hike.

Bond yields also climbed in NZ, but so did the equity market, with investors seemingly unfazed by inflation that refuses to peak.

Greg Smith, head of retail at Devon Funds, said one possible reason for the minimal reaction is that a lot of bad news had already been priced into the market.

He said investors were already expecting a high inflation number at 8.8% and the actual result was not that much higher, although breaking above 9% was psychologically important.

“An alternative theory is that there are already some signs we are at peak inflation,” he told BusinessDesk.

The inflation data looks backward at what happened during June, but many commodity prices – most notably oil – have fallen since the data was collected.

Pushpay Holdings led the local market higher, climbing 6.6% to $1.29, albeit on light volume. Investors traded just 380,000 shares versus a 30-day average of 1.9m.

Vector was up 3% at $4.39, Ryman Healthcare climbed 2.7% to $9.04 and Fletcher Building rose 2% to $5.12.

Shares in Auckland International Airport rose 2.2% to $7.35 after it released its monthly traffic update.

International passenger volumes in June were up 11% from the prior month, and total passenger volumes were up 38% from June last year. Both are down from pre-covid times.

The airport noted the load factors on international flights were at their highest level since 2015, showing “a combination of strong passenger demand and a shortage of airline capacity”.

Air New Zealand shares were up 1.6% at 63.5 cents, likely buoyed by the airport’s data release which shows the airline is having no trouble filling seats on its flights.

Shares in Trade Window fell 15.8% to 85 cents after it successfully raised $9m in a private placement to institutional investors at 70 cents per share.

The early-stage trade software company will raise a further $1m from existing investors in a share purchase plan.

Cannasouth jumped almost 10% to 40 cents today after it signed a major deal with a German pharmaceutical company.

The cannabis company has struck a supplier agreement with Weeco Pharma for the supply of cannabis flowers from NZ into Europe, which could be worth as much as $15m.

Blis Technologies dropped 6.3% to 3 cents after it said it would lay off some staff members following a strategic review.

The NZ dollar was trading at 61.13 US cents at 3pm in Wellington, little changed from 61.33 cents yesterday. The trade-weighted index was at 70.03 from 70.24 yesterday.

Tags: Market Close