NZ sharemarket edges up as inflation data released

The New Zealand sharemarket staged a strong turnaround after the latest consumer price index said annual inflation fell below 5% for the first time in 27 months.

Wednesday, January 24th 2024, 6:16PM

by BusinessDesk

The S&P/NZX 50 Index had fallen to 11,733.23 before the Stats NZ announcement but then climbed steadily to close at 11,856.61, gaining 53.73 points or 0.46%.

There were 72 gainers and 53 decliners over the whole market on volumes of 27.75 million share transactions worth $85.12m.

The December consumer price index (CPI) increased 0.5%, representing annual inflation of 4.7% and down from 5.6% in the September quarter. Inflation was at 4.9% in September 2021 and was last in the Reserve Bank of NZ (RBNZ) target of 1-3% in March 2021 at 1.5%.

The December quarterly rise was influenced by higher prices for housing and household utilities and offset by lower prices for food.

The latest inflation rate was below the RBNZ’s forecast of 5%. Australia has inflation of 4.3%, the UK's 4%, and the United States' 3.4%.

Greg Smith, head of retail with Devon Funds Management, said the headline inflation aligned with market expectations.

“Imported tradables inflation is lower at 3%, but non-tradables or domestic inflation remains sticky at 5.9%.

“The Reserve Bank has been overtly cautious throughout, and I don’t think the numbers will change the rhetoric. They might, however, steer the bank away from having one more official cash rate rise this year. Still, the market consensus is a rate cut in the second half of the year,” Smith said.

The RBNZ next meets on Feb 28.

Fisher and Paykel Healthcare was up 20c to $23.95; Summerset Group gained 24c or 2.27% to $10.79; Ebos Group collected 30c to $36.65; Oceania Healthcare increased 3c or 4.29% to 73c; and Meridian added 5c to $5.65.

Energy companies report

Contact, up 7c to $8.16, reported steady mass market electricity and gas sales of 279GWh for December compared with 283GWh for the same month in 2022. Contracted wholesale electricity sales were 692GWh (568GWh in December 2022). South Island controlled storage was 77% of the mean at Jan 16, and North Island was 130%.

Mercury, declining 6c to $6.49, said increased wind generation of 579GWh in the three months ending December offset lower hydro volume of 928GWh, down 28% on the previous corresponding period.

However, strong hydro inflows into January provide healthy storage for the third quarter, and Mercury is forecasting full-year hydro generation of 4,000 GWh.

Auckland International Airport, unchanged at $8.58, reported a 15% increase in passenger volumes last month to 1.71m, now 86% of the pre-covid level. International passengers rose 26% compared with December 2022.

In November, passenger volumes increased 18% to 1.58m, 87% of pre-covid, and international was up 31%. Interest rate-sensitive property stocks made some ground. Stride rose 5c or 3.79% to $1.37; Investore added 2c or 1.79% to $1.14; Kiwi Property was also up 2c or 2.38% to 86c; and Argosy gained 2c to $1.55.

Other gainers were Rakon increasing 6c or 4.96% to $1.27; Scales Corp collecting 11c or 3.41% to $3.34; Vulcan Steel gaining 16c or 2.04% to $8; Restaurant Brands up 10c or 2.56% to $4; Colonial Motor Company improving 13c to $8.62; and Carbon Fund rising 6c or 3.41% to $1.82.

NZME fell 5c or 4.85% to 98c; Michael Hill declined 4c or 4.17% to 92c; Scott Technology shed 9c or 2.77% to $3.16; Burger Fuel decreased 1.5c or 5.08% to 28; Eroad was down 3c or 3.23% to 90c; and Winton Land gave up a further 5c or 1.92% to $2.55.

Cannasouth increased 2.3c or 21.9% to 12.8c after reporting revenue increases of $26,000 in October, $201,000 in November and $243,000 last month. It started selling medicinal cannabis products in November.

Livestock Improvement Corporation increased 5c or 5% to $1.05 after reporting steady revenue of $171.95m for the six months ending November and a 13% fall in net profit to $28.98m. LIC is paying a special dividend of 13c a share on February 23 following the sale of its shares in National Milk Records.

Tags: Market Close