NZ investors shrug off Reserve Bank views and a retailer's woes

The New Zealand sharemarket, trading flat, shrugged off a Reserve Bank of NZ view that interest rates will have to stay higher for longer. However, the collapse of Godfreys will bring some uncertainty to the retail sector.

Tuesday, January 30th 2024, 5:56PM

by BusinessDesk

The S&P/NZX 50 Index dipped in the morning to 11,863.8 but recovered well to close at 11,9144, up 2.51 points or 0.02%.

There were 72 gainers and 66 decliners over the whole market on volumes of 21.85 million share transactions worth $95.98 million. Auckland International Airport was down 14c to $8.45 on trade worth $26.82m.

The Reserve Bank of NZ's (RBNZ) chief economist, Paul Conway, indicated that the battle with inflation was not yet over, though monetary policy is working. He said globalisation may become less of a disinflationary force than it has been.

“This means we should not expect substantial declines in imported inflation to achieve our inflation target. Instead, home-grown or domestic inflation would need to be lower than it has been historically.”

Conway said he wouldn’t give away anything about the future path of the official cash rate.

ANZ Research said the speech was not designed to have a big impact on market pricing, and it didn’t. ANZ continues to believe that solid progress in the inflation fight will allow the RBNZ to begin cutting the official cash rate in August, and it doesn’t think there will be a rate rise next month (it meets on Feb 28).

Greg Smith, head of retail with Devon Funds Management, said the RBNZ chief economist’s hawkish comments pushed back on the prospect of any rate cuts.

“The market has already accepted that the Reserve Bank is going to be conservative in the unwinding of the previous rate rises,” he said.

Unlisted retailer Godfreys, a household name in vacuum cleaners, went into voluntary liquidation after experiencing a 2.7% fall in sales last month – its biggest monthly drop since the covid lockdowns in 2020.

Godfreys has 141 stores in Australia and NZ and employs 600 people. Franchisees run a further 28 stores.

Smith said the Godfrey collapse highlights the challenges facing the retail sector with the cost-of-living pressures and people coming off very low mortgage rates.

Across the Tasman, the S&P/ASX 200 Index is closing in on its record high of 7,628.9 points, set in August 2021. The index had risen 0.23% to 7,596.1 points at 6pm NZ time.

On the NZ market

At home, Ebos Group was up 73c or 1.99% to $37.50; Mainfreight gained 66c to $71.10; Spark recovered 6.5c to $5.32; Summerset Group added 22c or 2.02% to $11.09; and a2 Milk increased a further 8c to $5.13, its highest level in five months.

Amongst the retailers, Briscoe Group was down 13c or 2.86% to $4.42; Hallenstein Glasson declined 16c or 2.87% to $5.41; KMD Brands decreased 3c or 4.05% to 71c; and The Warehouse was up 2c to $1.60.

Online travel provider Serko increased 11c or 2.72% to $4.16 after announcing that Silicon Valley technology entrepreneur Dr Sean Gourley has been to the board as an independent director.

Vista Group was up 9c or 5.81% to $1.64; Ventia Services gained 6c or 1.76% to $3.46; Eroad added 3c or 3.3% to 94c; Foley Wines rebounded 2c or 1.8% to $1.13; Colonial Motor Company increased 17c or 1.97% to $8.79; and 2 Cheap Cars was up 3c or 3.85% to 81c.

SkyCity was up 4c or 2.16% to $1.89; Millennium & Copthorne Hotels NZ gained 3c to $1.95; Stride Property rose 5c or 3.65% to $1.42; and Steel & Tube improved 3c or 2.65% to $1.16.

Infratil declined 16c to $10.71; Freightways was down 12c to $8.56; Fletcher Building shed 4c to $4.68; Synlait Milk decreased 3c or 3.57% to 81c; Move Logistics gave up 1.5c or 2.94% to 49.5c; and NZME fell 5c or 4.85% to 98c.

Comvita was down 6c or 2.65% to $2.20, matching its lowest level in five months.

Vector, decreasing 1c to $3.76, told the market that electricity connections in Auckland increased 2.2% to 619,996 for the year ending December, and gas connections were up 1.3% to 120,302.

Distributed electricity volumes for Vector's final six months increased by 3.9% to 4546GWh, with residential up 6.8% and business by 1.6%.

Tags: Market Close