Hopes inflation tamed in Aust raises NZ sharemarket

The New Zealand sharemarket perked up after news that Australian inflation is falling faster than most commentators expected.

Wednesday, July 26th 2023, 6:31PM

by BusinessDesk

The S&P/NZX 50 Index was trading at an intraday low of 11,930 points when it was announced that inflation across the Tasman was running at 6%, the same as NZ’s, and down from 7% in the previous quarter.

The index closed 20.86 points or 0.17% ahead at 11,954.73, but investors are still hanging back. Trading volumes remain light, with 21.34 million shares worth $73.97m changing hands, and there were 76 gainers and 51 decliners over the whole market.

Economists in Australia expected an annual inflation rate of 6.2% and were now saying their Reserve Bank will likely extend its interest rate pause next week.

The Australian consumer price index increased 0.8% for the June quarter - its lowest rise since September 2021 and easing from 1.4% in the previous three months.

The S&P/ASX 200 Index was up 0.75% to 7395.1 points at 6pm NZ time.

Jeremy Sullivan, an investment advisor with Hamilton Hindin Greene, said: “The Aussie market rallied, and this sentiment flowed into NZ. But all eyes are on interest rate decisions from the US Federal Reserve and European and Japanese central banks this week.

“For the trainspotters amongst us, the Dow Jones Industrial Average has had 12 successive days of rises and is just one day short of the record 13 set in 1987. It may be difficult to get past that because of the central bank meetings,” he said.

The Dow Jones had a small increase overnight, gaining 0.076% to 35,438.07 points and has risen 7% this year. S&P 500 Index increased 0.28% to 4567.46 and up 19% for the year. The Nasdaq Composite resumed its climb, gaining 0.61% to 14,144.56 and up 35% so far this year.

Back in NZ

At home, Carbon Fund surged 30c or 19.48% to $1.84 after the government adjusted the emissions trading scheme auction settings, with floor prices rising from the present $33.06 to $60 in December and other increases after that.

The government also decided that in December, the price to trigger any release of carbon units from the cost containment reserve will be $173, up from the present $82.

Next year the reserve volume will decrease from 8m units to 7.7m and continue reducing in the following years. The volume of units on offer will reduce by 17.6m units between 2023 and 2028.

Fund manager Salt Funds Management said the government had accepted most of the Climate Change Commission recommendations from 2022 but has made earlier cuts to the volume of units available at auction, thereby smoothing out the steep rate of decline that would have otherwise been needed from 2026.

Rural services company PGG Wrightson increased 14c or 3.45% to $4.20 after upgrading its full-year operating earnings (Ebitda) guidance to $60m from $57m.

PGG told the market that fourth-quarter trading exceeded expectations in the retail, livestock, and wool and water divisions, while real estate continued to operate in challenging market conditions.

Fonterra shareholders approved the return of $800m, or 50c a share, to them late next month following the $1 billion sale of the Chilean business Soprole to Gloria Foods. Fonterra Shareholders’ Fund’s share price was unchanged at $3.48.

Fisher and Paykel Healthcare gained 22c to $24.30; Freightways was up 10c to $8.74; Skellerup Holdings increased 7c to $4.49; Delegat Group collected 13c to $9.15; and Bremworth added 3c or 7.14% to 45c.

In the retail sector, Briscoe Group rose 21c or 4.77% to $4.61; Michael Hill added 2c or 2.04% to $1; and Hallenstein Glasson was down 17c or 2.7% to $6.13.

NZME rose 4c or 4.17% to $1; Steel & Tube also increased 4c or 3.33% to $1.24; and ArborGen gained 1.5c or 8.11% to 20c.

Ryman Healthcare was down 6c to $6.82; a2 Milk declined 5c to $5.43; Restaurant Brands shed 20c or 3.08% to $6.30; and Vulcan Steel retreated 12c to $8.38.

CDL Investments decreased 2c or 2.53% to 77c; AFT Pharmaceuticals was down 8c or 2.19% to $3.58; Eroad declined 3c or 2.08% to $1.41; and Blackpearl Group shed 3c or 5% to 57c.

SkyCity Entertainment, which announced a new governance structure, declined 2c to $2.24.

Vital Healthcare Property Trust, down 0.005c to $2.36, told the market it has settled the sale of one private hospital and two health centres in Australia, and the Southport Private Hospital will settle in early September. The sales are worth $155m. Vital Healthcare is buying 7,460 square metres of land adjoining Ormiston Hospital in Auckland for $13m.

Utility pole measurement provider ikeGPS fell 4c or 5.33% to 71c after reporting an 18% decline in first-quarter revenue to $5.6m compared with the previous corresponding period. Subscription revenue was up 36% to $2.5m, and transaction revenue was down 45% to $2.1m.

Tags: Market Close