Rollercoaster ride for NZ sharemarket as inflation reaction drives investors

The New Zealand sharemarket fell sharply and then recovered its nerve after the Reserve Bank dashed hopes of an early cut to interest rates.

Wednesday, May 22nd 2024, 6:42PM

by BusinessDesk

The S&P/NZX 50 Index was trading merrily, reaching an intraday high of 11,768.87 points just before the central bank’s latest monetary policy statement.

But the index turned and tumbled to a low of 11,670.14 before rising again in the broker matching session to close at 11,732.28, up 56.29 points or 0.48%.

The Reserve Bank of NZ lifted its inflation and peak official cash rate (OCR) forecasts, but it did keep the OCR unchanged at 5.5% or the seventh successive time.

There were 84 decliners and 51 gainers on the main board, with 37.41 million shares worth $141.54m changing hands.

Jeremy Sullivan, investment adviser with Hamilton Hindin Greene, said the Reserve Bank update was more hawkish than the market expected after some soft economic data recently.

“With the bank lifting the OCR peak, this implies there is a potential for a rise but I don’t think that will happen. The bank was jawboning the market not to get ahead of itself over rate cuts,” Sullivan said.

The Reserve Bank forecast inflation would reach 2% in mid-2026, six months later than previously thought. ANZ Bank predicts the first interest rate cut in May next year.

The NZ dollar rallied nearly half a cent against the American greenback, trading at US61.27c from the day’s low of 60.88c.

Fisher & Paykel Healthcare was up 26c to $28.62; Auckland International Airport increased 19c or 2.56% to $7.61; Infratil gained 13c to $10.83; a2 Milk added 15c or 2.03% to $7.54; Contact Energy improved 12c to $8.92; and SkyCity was up a further 8c or 4.55% to $1.84.

Comvita rebounded 10c or 5.71% to $1.85; Vulcan Steel rose 33c or 4.4% to $7.83; Winton Land was up 6c or 3.05% to $2.03; Tourism Holdings improved 5c or 2.73% to $1.88; Hallenstein Glasson added 11c or 2.04% to $5.50; and Michael Hill improved 2c or 3.85% to 54c.

Port reports

Napier Port rose 15c or 6.38% to $2.50 after reporting an improved six months to March, with revenue increasing 10.1% to $70.58m on the back of significant growth in export logs and cruise ship visits.

Net profit was up 64.8% to $14.32m and the port company is paying an interim dividend of 3c a share on June 27. Expected full-year operating earnings are $50m-$53m.

Container revenue declined 7.8% to $33.6m on a 17.3 per call fall in volumes to 98,000 TEUs (20-foot equivalent units). Bulk cargo revenue was up 27.1% to $26.2m on 1.88m tonnes, with log volumes lifting 35.7% to 1.55m tonnes. Cruise ship visits increased to 88 from 62.

Mercury Energy declined 18c or 2.75% to $6.37; Ryman Healthcare decreased 13c or 3.31% to $3.80; Scales Corp was down 14c or 4.13% to $3.25; and Delegat Group fell 13c or 2.52% to an eight-year low of $5.03.

Air NZ eased 1c or 1.85% to 52.5c; Arvida Group declined 2c or 2% to 98c; Rakon was down 4c or 4.35% to 88c; and Colonial Motor Co decreased 15c or 1.88% to $7.85.

Genesis Energy declined 7c or 3.06% to $2.215 after telling the market that the intervention campaign at Kupe KS-9 was unsuccessful in improving well performance.

The lower-than-expected production is expected to reduce Genesis’ full-year operating earnings (ebitdaf) by $15m-$20m. Its previous guidance was $430m. NZ Oil & Gas, which has a 4% interest in the Kupe field, was down 1c or 2.47% to 39.5c.

NZOG told the market it is delisting from the NZX on June 24 and concentrating on the Australian ASX, which has a larger capital and investor base.

Argosy Property, which owns 50 buildings, was down 4.5c or 4.02% to $1.075 after reporting a 3.3% increase in full-year revenue to $116.5m and net loss of $55.3m. This was due to a $111.7m reduction in the value of its industrial, office and large format retail portfolio.

Argosy’s net tangible assets fell to $1.45 a share, from $1.58 and with 96.7% occupancy it achieved 3.5% in rental growth on rents reviewed.

Just Life, unchanged at 19.1c, is delisting from the NZX on June 11 and transferring to the Unlisted Securities Exchange.

Tags: Market Close