NZ sharemarket up on economic recovery news

The New Zealand sharemarket bounced back from three successive down days as the latest data showed the economy is slowly recovering, prompting renewed hope of a 0.5% cut in the official cash rate next month.

Tuesday, January 14th 2025, 6:49PM

by BusinessDesk

The S&P/NZX 50 Index picked up after a morning fall to 12,795.82 and closed at 12,884.38, up 57.05 points or 0.44%.

Trading was slightly improved, with 23.36 million shares worth $86.16m changing hands.

Inflation reports

Jeremy Sullivan, investment adviser with Hamilton Hindin Greene, said: “We saw a rally in the latter stages of the US trading session, and this followed through to Australia and New Zealand in the afternoon.”

In the United States, investors have shifted from technology stocks to cyclical shares. The Dow Jones Industrial Average was up 0.86% to 42,297.12 points; the S&P 500 gained 0.16% to 5,836.22; and the Nasdaq Composite was down 0.38% to 19,088.1.

Across the Tasman, the S&P/ASX 200 Index was up 0.37% to 8,222.2 points at 6pm NZ time.

The NZ dollar continued to weaken against the American greenback to US56.09c – the lowest level for the kiwi since late 2022.

This week, US investors are waiting for two inflation reports, the producer and consumer price indices, that will guide the Federal Reserve’s next move on interest rate policy.

Fed chair Jerome Powell and other officials have indicated they are slowing down on lowering rates, and markets are pricing in no easing before July.

'Conflicting movements'

The NZ Institute of Economic Research’s (NZIER) quarterly survey of business opinion (Qsbo) confirmed that economic activity was picking up from subdued levels now that interest rates were on the way down.

A net 9% of respondents expected better times ahead, while 26% reported weaker trading activity in a soft last quarter of 2024.

ANZ said that for the monetary policy outlook, it’s the pace of recovery versus the economy’s supply potential that matters.

“There were some conflicting movements, but the overall levels of the key capacity indicators suggest the economy remains in a disinflationary state, consistent with the Reserve Bank’s November forecast.”

In the survey, experienced and expected costs fell, but prices lifted to levels consistent with 2% consumer price index inflation. ANZ said the overall message was that inflation pressures remain contained.

Sullivan said nothing in the survey suggested the Reserve Bank of NZ (RBNZ) would not reduce the official cash rate by 50 basis points (to 3.75%).

“It’s a different story in the US. The market was expecting four interest rate cuts through the year, and now it’s down to one because of new tariffs and fears of increasing inflation.”

Local stocks

At home, Fisher and Paykel Healthcare led the market up by gaining 74c or 1.97% to $38.29. Ebos Group was up 31c to $36.54; Mercury Energy increased 11.5c or 1.97% to $5.965; a2 Milk collected 11c or 1.82% to $6.16; and Fletcher Building added 5c or 1.79% to $2.85.

Napier Port gained 4c to $2.60; NZME was up 2c or 1.89% to $1.08; Vulcan Steel increased 18c or 2.24% to $8.20; The Warehouse added 3c or 3% to $1.03; Eroad collected 3c or 2.83% to $1.09; and T&G Global rose 5c or 3.13% to $1.65.

Pacific Edge settled at 5.9c, down 0.001c on trade of 5.3m shares worth $323,900, after falling 55% the day before when it told the market it would not continue to receive Medicare reimbursement for its Cxbladder tests.

The Medicare funding represents 60-70% of Pacific Edge’s revenue in its biggest market in the United States.

Scott Technology increased 9c or 4.09% to $2.29 after telling the market it has secured $18m worth of new contracts, strengthening its protein automation portfolio.

Scott is building an advanced lamb primal processing system for JBS in Australia, a loin deboner for Silver Fern Farms in NZ, and multiple fast-stopping BladeStop bandsaws for Cargill’s North American meat processing operations.

Elsewhere In the energy sector, Meridian was down 10c to $5.85, and Contact eased 12c to $9.23.

Hallenstein Glasson decreased 11c to $8.07; Serko declined 10c or 2.67% to $3.65; South Port NZ was down 15c or 2.54% to $5.75; Smartpay shed 2c or 3.39% to 57c; and Santana Minerals gave up 1.5c or 2.86% to 51c.

Seeka was down 10c or 2.99% to $3.25; Sky TV declined 7c or 2.57% to $2.65; Metro Performance Glass shed 0.005c or 8.06% to 5.7c; and Chatham Rock Phosphate decreased 0.006c or 5.71% to 9.9c.

TruScreen was up 0.001c or 3.85% to 2.7c after telling the market it made a presentation to the World Health Organisation global artificial intelligence (AI) collaboration meeting in November.

The company said the organisation recognised the use of its unique AI-enabled optoelectronic technology to reduce the preventable deaths of women from cervical cancer.

Tags: Market Close