The New Zealand dollar gained against its trans-Tasman counterpart as the Reserve Bank of Australia kept its cash rate unchanged, while warning it was ready to hike if it needed to rein in elevated inflation.

New Zealand’s S&P/NZX 50 index slipped further into the red after the RBA’s decision, with energy heavyweights Mercury NZ and Meridian Energy the major drags on the benchmark index.

Meanwhile, newly appointed Financial Markets Authority chair James Miller will step down from the boards of Ryman Healthcare and Vista Group International once replacement directors are in place to make sure he has the bandwidth for his new role at the regulator.

And after local trading ended, Craigs Investment Partners and Barrenjoey Capital Partners confirmed the rumours, with the Australian investment bank taking on various capital markets and corporate finance staff, including Justin Queale who takes on the role of executive chair of Barrenjoey NZ.

Familiar fears

The NZX 50 dipped 27.58 points, or 0.2%, to 13,860.66, with 24 stocks declining, 22 gaining and four unchanged. The S&P/NZX 20 index futures contract for September nudged up 0.1% to 7,777 with 25 lots traded for a value of $194,000, while the NZX 20 dropped 0.3% to 7,809.34.

Turnover across the main board was $124.5 million, of which Contact Energy accounted for $14.9 million as the power company rose 0.8% to $9.04, recovering some of Monday’s decline when it reported its annual result.

Forsyth Barr analysts Andrew Harvey-Green and Hugh Lockwood kept their ‘outperform’ rating on the power company and raised their target price by 20 cents to $11.10, with the data centre joint venture with Infratil’s CDC seen as credible path to extract maximum value from Contact’s Stratford site in Taranaki.

“While it is a step away from generating and retailing electricity, it is a lower-risk approach than the one taken by Mercury,” the analysts said in a note to clients. “A JV structure, supported by project financing, will also limit Contact’s upfront capital commitment.”

Meridian fell 1.1% to $5.57 and Mercury declined 1.7% to $6.57, while lines company Vector dropped 2% to $4.88. Infratil slid 1.1% to $15.11.

The local market was softer on the day as the RBA kept its cash rate at 4.35%, while noting the pace of inflation across the Tasman remained elevated and that it would take the necessary steps to rein in consumer prices.

The kiwi dollar climbed to 83.59 Australian cents at 5pm in Auckland from 83.37 cents yesterday, while Australia’s S&P/ASX 200 index was up 0.4% in late trading.

Magellan Financial Group jumped 4.6% to five-week high A$11.01 after Barrenjoey and Craigs confirmed speculation this week of a tie-up between the trans-Tasman firms. Barrenjoey will take on Craigs staff from its corporate finance, financial markets and support roles, and provide ongoing research, trading and execution for the $40 billion of client funds overseen by Craigs’ expanding wealth business.

Stock market operator NZX rose 1% to $1.495.

Focusing the workload

Meanwhile, Ryman slipped 1.9% to $2.06 and Vista advanced 0.8% to $2.66 as FMA chair James Miller said he planned to step down from those boards to devote enough time to his new regulatory role, leaving each board once replacements have been found. Channel Infrastructure, which he chairs, slipped 2.4% to $3.27 and Fletcher Building, where he’s deputy chair, rose 2.2% to $3.79.

Gentrack rose 1.4% to $3.70 after announcing a shake-up of the board, including Spark New Zealand’s chief financial officer Stewart Taylor coming in to chair the audit and risk committee, replacing Fiona Oliver who departs at the end of the week.

Tourism Holdings posted the steepest decline on the NZX 50, falling 2.4% to $2.85, while Serko recorded the biggest gain on the day, up 2.3% at $1.75 – its 10th straight gain.

Outside the benchmark index, PGG Wrightson dropped 6.3% to $2.23, snapping a five-day rally after reporting a 16% increase in annual operating earnings and lifting its final dividend.

Millennium & Copthorne Hotels New Zealand gained 2.9% to $3.20 after the hotel operator reported a 58% jump in first-half profit, as Queenstown remained a popular destination.

The kiwi dollar traded at 58.92 US cents at 5pm from 58.86 cents yesterday, while the yield on the 10-year government bond rose 1 basis point to 4.69%, below the 4.71% on its US equivalent.

Prime minister Christopher Luxon will hold an emergency in-person meeting with his National party caucus on Wednesday morning after the latest round of leaks questioning his leadership.

Reporting by Paul McBeth.