NZ sharemarket dips on low volumes as Aust market moves up on inflation news

The New Zealand sharemarket retreated more than half a percent on light trading as the Reserve Bank of Australia kept its official cash rate unchanged for the second straight month.

Tuesday, August 1st 2023, 6:32PM

by BusinessDesk

The S&P/NZX 50 Index fell at the opening and never recovered, giving up two-thirds of its gain the day before and closing at 11,980.41 – down 75.74 points or 0.63% after increasing 0.92% on Monday.

There were 56 gainers and 77 decliners over the whole market, with 21.95 million shares worth $64.76m changing hands.

The Australian Reserve Bank held its rate at 4.1% (NZ’s is 5.5%) and said inflation is declining but is still too high (at 6%), household consumption growth is weak, and conditions in the labour market remain very tight, although they have eased a little.

“Returning inflation to the target of 2-3% within a reasonable timeframe remains the priority. The outlook for household consumption is an ongoing source of uncertainty.

“The decision to hold rates unchanged provides further time to assess the impact of the increase in interest rates to date and the economic outlook,” the bank said.

“Some further tightening of monetary policy may be required, but that will depend upon the data and the evolving assessment of risks.”

The S&P/ASX 200 Index surged on the Reserve Bank announcement and was up 0.54% to 7450.1 points at 6pm NZ time. The NZX index was unaffected.

David McConnochie, investment adviser with Forsyth Barr, said the local market had a directionless day, giving back nearly all that it got the day before.

US markets continue to rise

Wall Street had another solid day’s trading. The Dow Jones Industrial Average was up 0.28% to 35,559.53 points; S&P 500 gained 0.15% to 4588.96; and Nasdaq Composite increased 0.21% to 14,346.02.

The markets had a strong July, the Dow and S&P 500 increasing 3% and Nasdaq 4%, signalling the fifth successive month of gains, the longest run in the two years.

Investor confidence has been driven by a robust earnings season and falling inflation, meaning the US Federal Reserve may be coming to the end of its monetary tightening, and the economy may be heading for a soft landing.

The markets have been led by The Magnificent Seven of Alphabet (Google), Amazon, Apple, Meta, Microsoft, Nvidia and Tesla. But older, more conventional stocks, Boeing was up 13% in July, 3M 11% and Bank of America increased 12%.

At home, energy stocks Meridian and Mercury gave back gains, falling 13.5c or 2.39% to $5.51 and 5c to $6.54, respectively.

Ebos Group declined 75c or 1.95% to $37.80; Summerset Group was down 10c to $10.20; Infratil decreased 11c to $9.84; Hallenstein Glasson fell 15c or 2.34% to $6.25; Tourism Holdings shed 6c to $3.48; and Channel Infrastructure was down 3c or 1.83% to $1.61.

Argosy Property was down 1.5c to $1.205; Property for Industry decreased 6c or 2.42% to $2.42; NZX declined 3c or 2.44% to $1.20; and MHM Automation shed 3c or 3.53% to 82c.

Seeka decreased 5c or 12.82% to $2.70; NZ Oil & Gas declined 1.5c or 3.75% to 38.5c; Private Land and Property Fund was down 3.5c or 2.55% to $1.337; Smartpay Holdings shed 4c or 2.19% to $1.79; and Steel & Tube gave up 5c or 3.88% to $1.24.

Amongst the gainers, Freightways was up 14c to $8.70; Briscoe Group collected 9c or 1.95% to $4.70; Marsden Maritime Holdings improved 12c or 2.49% to $4.94; 2 Cheap Cars rose 7.5c or 17.65% to 50c; and NZME rose 4c or 4.21% to 99c.

Sanford chief executive Peter Reidie has resigned after two and a half years in the role, and board member Craig Ellison has taken over in the interim. Sanford’s share price was up 1c to $4.17.

Metro Performance Glass, down 0.003c to 18c, told shareholders at the annual meeting that net debt is expected to be $53m-$55m for the six months ending September and operating earnings (Ebit) better than the previous corresponding period, though it didn’t give any numbers.

Metroglass said through the second half of the 2023 financial year, the NZ construction market started to soften, which has continued into the current year. “It is clear that we are in a period of reduced activity.”

The amount of glass processed in the first quarter of the 2024 financial year was 24% lower than the same period last year. NZ revenue was 9% lower, but improved pricing and mix meant group revenue was similar to last year. Gross profit improved by 7%.

Metroglass shareholders voted against Graham Stuart, a member of the five-strong board in 2019, being re-elected as a director 78.5% to 21.5% – a move that doesn’t happen too often.

Tags: Market Close