New Zealand’s S&P/NZX 50 index resumed its march upwards after the Reserve Bank played down more aggressive interest rate hikes, having delivered the expected increase today.

Heavyweight companies drove the benchmark higher, with Fisher & Paykel Healthcare, Meridian Energy and Infratil among the day’s gainers, while Genesis Energy advanced after securing Methanex’s gas supply as the methanol producer mothballed domestic production.

Fonterra Shareholders’ Fund units rallied after the dairy cooperative said annual earnings would come in at the top end of guidance, while milk prices rose at the latest Global Dairy Trade event.

Meanwhile, stock markets across Asia were broadly weaker as rising oil prices upped the ante for central banks to increase interest rates, with US President Donald Trump downplaying the chance of pursuing a deal with Iran after the revival of reciprocal strikes.

Managing expectations

The NZX 50 climbed 143.67 points, or 1%, to 13,930.57, with 34 stocks gaining, nine falling and seven unchanged. The S&P/NZX 20 index futures contract for September advanced 0.9% to 7,710, with 51 lots traded for a value of $392,000, while the NZX 20 increased 1% to 7,776.28.

Turnover across the main board was $158.9 million, of which F&P Healthcare accounted for $25.7 million as it rose 0.9% to $44.60.

The benchmark index rallied after the Reserve Bank lifted the official cash rate 25 basis points to 2.75%, as expected, with members of the monetary policy committee saying hiking now meant the central bank might not have to raise as aggressively in the future.

“It looks more like the relief that the RBNZ delivered the expected hike without signalling a much more aggressive tightening cycle,” Moomoo market strategy consultant Greg Boland said. “The absence of a significantly more hawkish message was the surprise.”

The kiwi dollar dropped to 58.30 US cents at 5pm in Auckland from 59.09 cents yesterday, and the two-year swap rate fell 3 basis points to 3.69%.

New Zealand’s stock market outperformed most of Asia, where rising oil prices continued to build expectations for central banks to hike interest rates, pushing government bond yields even higher. The yield on Australia’s 10-year government bond rose 3 basis points to 5.18%, compared to a 2 basis point decline to 4.78% for New Zealand’s equivalent.

Japan’s Nikkei 225 index dropped 2.9% in late trading, while Hong Kong’s Hang Seng declined 1% and Australia’s S&P/ASX 200 index was down 1%.

Blue chips underpinned the local rally, with Meridian up 1.5% at $5.52 while Infratil gained 2.2% to $14.58.

Genesis rose 2.6% to $2.75, after the electricity generator-retailer said it secured 11.4 petajoules of additional gas supply from March next year to the end of 2029 after Methanex said its domestic operation was no longer sustainable and it would mothball its New Zealand facilities in the first three months of next year.

Contact Energy advanced 1.2% to $8.78, while Mercury NZ slipped 0.3%, or 2 cents, after the power company shed rights to an upcoming dividend payment of 17 cents per share.

Chorus posted the biggest gain on the day, up 2.7% at $9.02, while exporter Sanford rose 2.5% to $6.90.

Milking it

Fonterra Shareholders’ Fund units gained 2.4% to $7.35 after the dairy cooperative said it expected to report underlying earnings at the top end of its guidance of 60-to-70 cents per share, implying a range of $965.5 million to $1.13 billion.

Separately, the GDT price index rose 0.9% for an average winning price of US$3,910 a tonne at the latest Global Dairy Trade auction, with increases in skim milk powder and butter milk powder offsetting a 0.1% dip in whole milk powder prices to US$3,585/tonne. Synlait Milk fell 3.7% to 39.5 cents.

Port of Tauranga rose 1% to $8.27 after the maritime hub sold an Auckland property to Trade Depot for $88.7 million.

Stride Property Group posted the biggest decline on the NZX 50, falling 3.1% to $1.09 and Sky Network Television snapped three days of gains, slipping 2.5% to $3.65.

Spark New Zealand was the most heavily traded stock on the day with a volume of 5.3 million shares as the telco increased 0.5% to $2.19.

Retirement village operators were mixed after Statistics New Zealand figures showed residential building consents rose 21% in the 12 months ended July 31.

Satish Ranchhod, a senior economist at Westpac NZ, said the outlook for home building remained positive, although he was cautious about how much activity would rise and how enduring the upswing would be.

“While consent levels are elevated, the number of new projects being approved each month has been flattening off since May,” Ranchhod said in a note. “In addition, we’re hearing increasing concerns about increasing build costs and rising interest rates, along with continued softness in the housing market.”

Ryman Healthcare rose 2.5% to $2.08 and Oceania Healthcare gained 0.6% to 79.5 cents, while Fletcher Building was unchanged at $3.95 and Summerset Group Holdings decreased 0.4% to $8.47.

Reporting by Paul McBeth.