NZ sharemarket rises 0.7% on back of OCR cut

The New Zealand sharemarket greeted the latest interest rate cut – with the promise of more to come – by rising 0.7% to its highest close in more than three years.

Wednesday, November 27th 2024, 6:30PM

by BusinessDesk

The S&P/NZX 50 Index climbed steadily in the afternoon – after the Reserve Bank of NZ (RBNZ) reduced the official cash rate (OCR) by 50 basis points to 4.25% – and finished on 13,212.92, up 99.16 points or 0.76%.

The index last reached that level on Oct 4, 2021, when it sat at 13,337.27 points. Its record close was 13,558.19 on Jan 8, 2021, and the index has risen 12.6% so far this year.

Volumes were slightly lighter, with 39.96 million shares worth $169.11m changing hands.

'Dumping of goods'

Greg Smith, head of retail with Devon Funds Management, said the market liked the fact there were more cuts to come. There was nothing untoward in the RBNZ statement.

“It left the door open for another 120-basis points reduction before we get to the 3% neutral OCR, though that’s a moving target, and another big 0.5% cut is coming early next year.

“One interesting comment from the Reserve Bank was that we could see dumping of goods affected by the Trump tariffs from countries like China, and that might, for example, bring down electric vehicle prices in New Zealand,” Smith said.

The RBNZ’s Monetary Policy Committee agreed that the latest 50-basis point cut was consistent with their mandate of maintaining low and stable inflation while seeking to avoid unnecessary instability in output, employment, interest rates and the exchange rate.

Economic growth was expected to recover during next year, as lower interest rates encourage investment and other spending.

Employment growth was expected to remain weak until mid-next year, and, for some, financial stress will take time to ease, the bank said.

Local stocks

Fisher and Paykel Healthcare recovered 66c or 1.75% to $38.42 on the eve of announcing its latest financial result, and Gentrack reached a new peak after climbing a further 39c or 3.09% to $13.

Spark rallied 7.5c or 2.63% to $2.93 on trade worth $25.9m; Auckland International Airport was up 17c or 2.11% to $8.22; a2 Milk collected 22c or 3.58% to $6.36; Chorus gained 10.5c to $9.10; Turners Automotive increased 23c or 4.46% to $5.39; and Skellerup added 10c or 2.09% to $5.10.

Wine exporter Delegat Group was up 9c or 1.9% to $4.83 after telling shareholders at the annual meeting that it was maintaining its full-year net profit guidance of $55m-$60m and was confident of continuing to grow profitability in all markets in future years.

Delegat said based on sales performance across its major markets, Oyster Bay is now ranked the No. 3 premium brand in the world and it was focused on attracting more a million new customers to Oyster Bay in the US.

Fellow exporters Foley Wines increased 5c or 7.69% to 70c, and Marlborough Wine Estates was up 0.004c or 8.51% to 5.1c.

Other gainers were Air NZ, increasing 1c or 1.82% to 56c; Michael Hill, adding 3c or 4.69% to 67c; Move Logistics, rising 2.5c or 14.71% to 19.5c; and Pacific Edge, rebounded 0.008c or 6.15% to 13.8c.

Mainfreight was down $1 to $75; ANZ Bank declined $1.10 or 3.08% to $34.65; Napier Port shed 8c or 3.1% to $2.50; Vista Group decreased 6c or 1.99% to $2.95; and The Warehouse eased 2c or 1.92% to $1.02.

Genesis Energy was down 5.5c or 2.9% to $2.345; Argosy Property declined 3.5c or 3.17% to $1.07; AFT Pharmaceuticals fell 14c or 4.76% to $2.80; Comvita shed 6c or 5.94% to 95c; and T&G Global eased 3c or 1.96% to $1.50.

Rakon, manufacturer of frequency control and timing solutions, declined 4c or 5.58% to 0.645c after reporting a 32% fall in revenue to $41.65m and a net loss of $10.36m for the six months ending September.

Telecommunications revenue fell 51% to $16.8m, and positioning was down 23% to $5.5m, while aerospace and defence revenue was up 10% to $16.8m and expected to account for nearly 50% of total revenue by the end of the decade.

Solution Dynamics fell 32c or 28.57% to 80c after telling the market that it missed out on a tender with its largest customer, though it will continue to provide communication services on a contestable project-by-project basis.

Solution said it would undertake a very significant restructuring to align the company’s cost structure to the risk of lost margin and business.

Smartpay, down 2c or 3.05% to 63.5c, had earlier reported half-year revenue of $50.8m, up 8.28%, and a net profit of $907,000, with Australian transactional revenue up 9% to $41.5m on the back of its nationwide launch of the next generation Android merchandising terminal.

Tags: Market Close