NZ market flat as RBA hits the handbrake

All was quiet on New Zealand’s benchmark index on Tuesday as the Reserve Bank of Australia has continued to hit an expected pause on hiking the cash rate, and investors wait to see if the Reserve Bank of NZ follows the same line of thinking – or goes rogue.

Tuesday, October 3rd 2023, 6:10PM

by BusinessDesk

The S&P/NZX 50 Index edged down 7.6 points, or 0.07%, to 11,235.72. Turnover was $102.5 million. There were 40 gainers and 95 decliners on the main board.

Capital Economics senior Australia and NZ economist Marcel Thieliant said although the new Reserve Bank of Australia (RBA) governor Michele Bullock “didn’t spring any surprises” at the RBA’s monetary policy decision today, the economics company believed the Australian central bank would hike interest rates to a peak of 4.35% at its next meeting in November.

OCR

The Reserve Bank of NZ (RBNZ) releases its monetary policy statement and official cash rate (OCR) on Wednesday, and most of the banks in NZ are pretty confident that the central bank will wait until after the dust settles from the election to announce any big hikes.

In August, the monetary policy committee said the present level of economic activity was limiting spending and, consequently, inflation, but the committee also expressed concerns that there was a risk of both economic activity and inflation not slowing down as much as initially expected.

To hike or not to hike? This time tomorrow, all will have been revealed.

Peter McIntyre, an investment advisor at Craigs Investment Partners, said economic data would be on investors’ minds over the next few days thanks to the RBA and RBNZ.

“Interest rates are the talk of the town,” he told BusinessDesk.

Investore

In company news, Investore Property announced it expects a 6.6% or $70m gross reduction in fair value of its portfolio for the six months ended Sept 30.

Based on the draft independent valuations, this would result in an expected total portfolio value of $1 billion.

“The impacts of elevated inflation levels and higher interest rates continue to impact investment conditions and investor activity levels, leading to higher property capitalisation rates and lower valuations,” Investore fund manager Adam Lilley said.

The stock was flat at $1.26 per share by early evening.

Shares in The Warehouse were flat at $1.75. Sanitarium announced today it would continue to supply The Warehouse with Weet-Bix, ending the cereal stoush between the food brand and retailer.

Cannasouth

Medicinal cannabis company Cannasouth was down 1 cent or 4.6% to 21 cents after it told the market it needed to raise capital due to its “constrained cash position”.

McIntyre said Synalit, Mainfreight, Contact Energy, Infratil, and Fletcher Building were “market leaders” on Tuesday, while Meridian Energy, Skellerup, Summerset Holdings, and Ebos had dragged the market lower.

Fletcher Building was up 4 cents or 0.9% to $4.76, Contact rose 8 cents or 1% to $8.13, and Infratil was up 9 cents or 0.9% to $10.10.

Mainfreight rose $1.64 or 2.6% to $64.69, and Synlait was flat at $1.42 per share by early evening.

Meridian Energy was down 4.5 cents or 0.9% to $5.15, Summerset Holdings fell 19 cents or 1.9% to $9.89, Skellerup Holdings was down 7 cents or 1.5% to $4.60, and Ebos Group edged down 81 cents or 2.3% to $34.44.

The NZ dollar was trading at 59.38 US cents at 3pm in Wellington, down from 59.93 on Monday. The trade-weighted index was at 70.69, from 71.07 on Monday.

Tags: Market Close