NZ shares drift as Aussie central bank holds rates while talking tough

The New Zealand sharemarket continued to drift sideways while the Australian Reserve Bank kept its cash rate on hold while still talking tough.

Tuesday, December 5th 2023, 6:32PM

by BusinessDesk

The S&P/NZX 50 Index closed at 11,356.99, down 10.81 points or 0.10%, and the S&P/ASX 200 had declined 0.96% to 7056.6 points at 6pm NZ time.

There were 50 gainers and 78 decliners on the NZX main board, again featuring light trading with 22.42 million shares worth $79.03m changing hands.

The Reserve Bank of Australia (RBA) lifted the cash rate by 25 basis points last month to a 12-year high because the progress in bringing inflation back to the target range of 2-3% by the end of 2025 was looking slower than earlier forecast.

This month, the RBA kept the rate at 4.35%, as expected, but there were still significant uncertainties around the economic outlook.

It remained resolute in its determination to return inflation (running at 4.9%) to the target and will do whatever is necessary to achieve that outcome.

Market tension

Greg Main, Jarden Wealth Management adviser, said there is still some tension in the markets over where interest rates will land – and whether the Federal Reserve will cut rates next year.

“It is more a macro-economic picture at the moment, and the markets are dancing around what central banks will do,” he said. “If the US does cut, there will be implications over where money is allocated.

“The US has had a rally, but the New Zealand and Australian markets have been a bit divergent – up and down, flat and all around.”

US stocks slipped on Monday night as investors questioned whether the markets are getting too far ahead of themselves following five straight winning weeks.

As the US major indices took a breather, alternative investments rallied. Gold hit an intraday all-time high of US$2,100 an ounce before settling at US$2,033.90.

Bitcoin went over US$41,000 (NZ$66,628) to notch a 19-month high and a 150% rise this year. Bitcoin went from US$18,000 at the start of the covid pandemic to more than US$110,000 in November 2021 but fell back with the series of Federal Reserve interest rate hikes and the collapse of FTX, one of the biggest crypto companies.

The ANZ World Commodity Price Index fell 1.3% in November, ending the recent run of stronger prices. Food commodity prices generally fell while prices for logs and aluminium improved.

At home, Gentrack and Turners Automotive, soon to join the NZX top 50, lost some ground from the day before and declined 16c or 2.43% to $6.42 and 6c to $4.74, respectively.

On the local market

Synlait Milk and Pacific Edge, both going out of the top 50, continued to fall, down 6c or 4.84% to $1.18 and 0.004c or 4.08% to 9.4c.

Mainfreight, falling as low as $56.30 on September 25, is speeding down the recovery road, rising $1.18 or 1.73% to $69.25. Another market leader, Ebos Group, was up 39c to $37.71.

Insurer Tower gained 3c or 5.17% to 61c after announcing a review of its ownership. Vital Healthcare Property Trust was up 6c or 2.93% to $2.11.

NZME increased 3c or 3.57% to 87c; Sanford was up 7c or 1.87% to $3.82; Ventia Services also added 7c or 2.33% to $3.07; and Accordant Group rebounded 2c or 2.15% to 95c.

SkyCity declined 6c or 3.19% to $1.82; a2 Milk was down 7c to $4.22; Serko shed 21c or 4.92% to $4.06; Green Cross Health fell 7.5c or 7.11% to 98c; Heartland Group decreased 4c or 2.44% to $1.60; and Arvida Group was down 2c or 2.04% to 96c.

Restaurant Brands was down 15c or 3.66% to $3.95; Vista Group declined 6c or 4.14% to $1.39; Comvita shed 5c or 2.04% to $2.40; and Smartpay decreased 4.5c or 3.21% to $1.355.

Tags: Market Close