The NZ sharemarket ends week with fall of 0.6%

The New Zealand sharemarket was rattled by the suggestion from ANZ that the Reserve Bank of NZ could still hike the official cash rate twice this year.

Friday, February 9th 2024, 6:27PM

by BusinessDesk

The S&P/NZX 50 Index had a late rise after reaching an intraday low of 11,782.24 and closed at 11,862.95, down 9.37 points or 0.08%.

The index finished the shortened week with a fall of nearly 0.6%, but it is still ahead more than 0.5% for the year-to-date.

There were 57 gainers and 69 decliners over the whole market on volumes of 21.83 million transactions worth $89.51 million.

OCR increases

The market was surprised by the ANZ Research forecast of 25 basis point rises in the official cash rate (OCR) in February and April, which would take the rate to 6%. ANZ economists now believe the first rate cut will occur next February instead of August this year.

The Reserve Bank of NZ (RBNZ) meets on Feb 28 and April 10 to provide the next monetary policy statements.

The NZ dollar strengthened to A94.35c against the Australian – a one-year high after sitting at 93c at the end of January.

ANZ said the RBNZ warned in November that if inflationary pressures turned out to be stronger than anticipated, the OCR would likely need to increase further. Data since then has been a series of small but pretty consistent surprises in that direction.

The RBNZ will be aware that restarting hiking cycles when per capita gross domestic product is down 3% might appear counterintuitive. But at the end of the day, they have a job to do – getting inflation sustainably down to 2% in the medium term.

“We just don’t think the Reserve Bank committee will feel confident that they’ve done enough to meet their inflation mandate,” ANZ said.

Shane Solly, portfolio manager with Harbour Asset Management, said the ANZ forecast was another perspective. There had been a series of economic data at the higher end of expectations making it tougher for the RBNZ to think about cutting the OCR.

“There is going to be data pointing both ways – reducing or increasing the OCR – and the Reserve Bank has to be careful about making policy decisions. Companies are not facing pressure from labour costs and hiring people, and it would be a big call for the Reserve Bank to hike the OCR,” Solly said.

Markets

In the United States, the S&P 500 broke through the 5,000 points mark for the first time during intraday trading, but it closed at 4,997.91, up 0.057%.

In Japan, the Nikkei 225 Index hit a 34-year high after gaining 0.44% to 37,024.25 points at 5.45pm NZ time. Bank of Japan said it was unlikely to raise interest rates aggressively, even after ending its negative interest rate policy.

At home, Fisher and Paykel Healthcare was down 13c to $24.42; Meridian Energy shed 5c to $5.61; Freightways declined 11c to $8.33; ANZ Bank decreased 80c or 2.72% to $28.66; and SkyCity gave up 4c or 1.89% to $2.08.

In the property sector, Argosy declined 2c or 1.74% to $1.13; Stride was down 2c to $1.36; Investore also shed 2c to $1.17; and Vital Healthcare Trust increased 5c or 2.35% to $2.18.

Wine exporters Foley Wines fell 12c or 10.26% to $1.05, and Delegat Group was down 10c to a seven-year low of $5.90.

Michael Hill decreased 3c or 3.26% to 89c; Restaurant Brands was down 6c to $3.79; Smartpay Holdings declined 3c or 1.93% to $1.525; Blackpearl Group shed 2.5c or 5% to 47.5c; and My Food Bag gave up 0.008c or 5.06% to 15c.

Ebos Group was up 41c to $36.40; Vista Group collected 4c or 2.5% to $1.64; Green Cross Health increased 5c or 4.24% to $1.23; 2 Cheap Cars added 2c or 2.5% to 82c; and T&G Global gained 4c or 2.12% to $1.93.

NZ Rural Land, unchanged at 95c, has completed the sale of a 25% shareholding to Sydney investment firm Roc Partners for $44.2m. NZ Rural will use some of the money to repay a $11.8m convertible note.

Tags: Market Close