Tariffs trump OCR cut

A cut in the official cash rate was not enough to boost the NZX today; rather Trump's tariffs ruled the day.

Wednesday, April 9th 2025, 6:53PM

by BusinessDesk

Household and business relief from a further reduction in interest rates at home couldn’t stop the New Zealand sharemarket falling amidst the tariff turmoil offshore.

The S&P/NZX 50 Index did spike to 11,867.06 points when the Reserve Bank announced a 25 basis-points cut in the official cash rate (OCR) to 3.5% - its lowest level since October 2022. Local banks had another round of reducing mortgage and borrowing rates.

But as the sweeping US, and retaliatory, tariffs took effect, the NZX index headed south again and closed at 11,806.55, down 84.89 points or 0.71%.

Trading was steady with 39.76 million shares worth $146.92m changing hands.

Across the Tasman, the S&P/ASX 200 Index had fallen 2.1% to 7352.3 points at 6pm NZ time.

Jeremy Sullivan, investment adviser with Hamilton Hindin Greene, said the OCR cut was already priced into the local market, and it was another down day here and in Australia.

“The Reserve Bank governor (Christian Hawkesby) indicated the tariffs and the disruption they are going to cause require a bit more time to see where the dust settles and what the implications are for New Zealand.

“But the low NZ dollar (now trading at US55.3c) would lessen the impact of a reduction in demand for New Zealand exports. The market is now expecting an OCR terminal rate of 2.6-2.75% within 12 months.”

Sullivan said the weighted average US tariff against China is 125%, and this is going to have a large impact on a company like (New Zealand-bred) Zuru Group. They put most of their stuff into the United States from manufacturing in China.

He said Goldman Sachs has estimated the tariff, if maintained, will reduce Chinese gross domestic product by 2.4%, cutting the government’s forecast in half. “That’s a big dent in the Chinese economy.”

At home, Fisher and Paykel Healthcare was down 55c to $33; Chorus decreased 11c to $7.80; Spark declined 3.5c to $2.05; Summerset shed 20c or 1.82% to $10.78; and Infratil, which held an investor day at a CDC data centre campus in Melbourne, eased 15c to $9.45.

Skellerup Holdings, in the firing line of the US tariffs, declined a further 7c to $4.11, having fallen from $4.82 in a week.

Vulcan Steel is also having a rocky ride, down 289c or 3.69% to $7.30 after reaching $8.80 a week ago. SkyCity was down 3c or 2.54% to $1.15, and Fonterra Shareholders’ Fund declined 17c or 3.05% to $5.41.

Seeka decreased 16c or 4.42% to $3.46; Vista Group declined 10c or 2.92% to $3.32; Scales Corp shed 10c or 2.38% to $4.10; Comvita fell 4c or 5.97% to 63c; Santana Minerals fell 5c or 10% to 45c; and Synlait Milk was down 3c or 4% to 72c.

In the property sector, Kiwi declined 2.5c or 2.86% to 85c; Investore was down 2c or 1.9% to $1.03; and Vital Healthcare Trust decreased 3c or 1.74% to $1.69.

Ebos Group was up 33c to $37.80; a2 Milk gained 5c to $8.56; Hallenstein Glasson added 13.5c or 1.79% to $7.66; The Warehouse collected 3c or 3.75% to 83c; Scott Technology increased 6c or 3.16% to $1.96; and NZ Rural Land was up 2c or 2.27% to 90c.

Napier Port gained 5c or 2.04% to $2.50 after container volumes increased 13.9% to 112,000 TEUs (20-foot equivalent units) and bulk cargo decreased 9.2% to 1.71m tonnes for the six months ending March. Cruise ship visits declined from 88 to 77.

Over the second quarter, container volumes rose 21.4% to 68,000 TEUs with Pan Pac back to full pulp and timber operations. Bulk cargo declined 8.8% to 800,000 tonnes with log exports down 14.6% to 108,000 tonnes. Logs also fell 12.7% to 197,000 tonnes for the six months.

Fellow port company Tauranga weas down 16c or 2.56% to $6.10.

Tourism Holdings was up 5c or 3.16% to $1.63 on the day Canada imposed a 25% retaliatory auto tariff on imports from the US, including recreational vehicles (RV). The company sources 100% of its Canadian RV fleet in the US.

Tourism Holdings said the tariff is likely to increase the value of its RVs currently in Canada by as much as 22%. The company expects about half of its 2025 new builds will be moved into Canada before the tariffs take effect and is looking to relocate a portion of its existing US rental fleet to Canada.

Radius Residential Care was up 2c or 9.3% to 23.5c after indicating an improved 12 months due to strong trading in the final quarter. Unaudited operating earnings (ebitda) were between $23.3m-$23.7m compared with $20.9m in the previous year.

Radius said the business benefitted from an increased accommodation supplement of $1m and contribution from Cibus Catering after taking a 51% shareholding in October.

Tags: Market Close