RBA still seen hiking next week as energy shock starts to bite.
Fisher & Paykel Healthcare Optiflow product.
New Zealand’s S&P/NZX 50 index edged higher as Fisher & Paykel Healthcare did the heavy lifting in a subdued trading session ahead of earnings by four of the Magnificent 7 megacap stocks overnight and the Federal Reserve’s last rate decision under the chairmanship of Jerome Powell.
The local bourse was weaker through much of the day as KMD Brands was dragged near its recent offering price and travel and tourism companies Serko and Tourism Holdings followed the soft cue from Booking Holdings’ warning that the Middle East conflict threatens demand in some regions.
Meanwhile, the kiwi dollar hit a fresh 13-year low against its trans-Tasman counterpart as Australian inflation figures reaffirmed expectations the Reserve Bank of Australia will hike its target cash rate next week.
And Reserve Bank governor Anna Breman reiterated New Zealand’s core inflation stayed in the target band through the March quarter during a panel discussion, saying the monetary policy committee is still ready to act quickly if short-term inflation feeds into more persistent price rises.
The NZX50 increased 5.9 points, or 0.1%, to 12,770.3, with 16 stocks gaining, 26 declining, and eight unchanged. Turnover across the main board was $136.4 million, of which F&P Healthcare accounted for $16.7 million as it rose 1.5% to $36.25.
“We’ve been a bit choppy today – if it wasn’t for F&P Healthcare, our market would be weaker,” said Peter McIntyre, an investment adviser at Craigs Investment Partners.
Power companies joined the medical device maker in pushing the local bourse into the green, as Contact Energy gained 1% to $9.32, Meridian Energy increased 0.4% to $5.55 and Mercury NZ advanced 0.6% to $6.71. Genesis Energy increased 0.4% to $2.39.
Vulcan Steel posted the biggest gain on the day, up 2.5% at $6.25, while Fletcher Building advanced 1.1% to $2.81 after Forsyth Barr analysts reaffirmed their $3.80 price target and ‘outperform’ rating on the stock after the building materials company sold its low-margin Fletcher Reinforcing arm.
Markets across Asia were mixed ahead of quarterly earnings from Meta Platforms, Microsoft, Google-parent Alphabet and Amazon, and a policy review by the Federal Reserve. Australia’s S&P/ASX 200 index was down 0.3% in late trading and Japan’s Nikkei 225 dropped 1%, while Hong Kong’s Hang Seng gained 1.4%.
The Fonterra Shareholders’ Fund and A2 Milk Co were among the bigger drags on the day for the NZX50, with the fund down 4.6% at $6.40 and a2 falling 1.8% to $8.72. Synlait Milk’s 7.8% slide to 41.5 cents was the biggest fall across the main board.
KMD posted the steepest decline on the NZX50, falling 6.2%, or 0.4 of a cent, to 6.1 cents on the biggest volume of the day, with 3.4 million shares changing hands.
Serko fell 4.5% to $1.69 and THL declined 2.9% to $2.04 after booking.com owner Booking Holdings cut its annual outlook, saying the Middle East conflict would likely cause travel to fluctuate across routes involving that territory. Auckland International Airport slipped 0.5% to $8.18 and Air New Zealand was unchanged at 43 cents.
Property companies were broadly softer despite a 3 basis point dip in the 10-year government bond yield to 4.71%, with Stride Property down 4.5% at $1.095, Argosy Property falling 2.3% to $1.07 and Kiwi Property Group declining 1.7% to 88.5 cents.
Outside the benchmark index, ikeGPS climbed 2.5% to a five-month high $1.22 on an unusually large volume of 1.8 million shares, while My Food Bag extended its rally on a strategic review, climbing 7.7% to 28 cents.
The S&P/NZX 20 index futures contract for June was fractionally weaker, closing at 7,227, with 51 lots traded on turnover of $368,000. The NZX20 nudged up 0.2% to 7,210.87.
The kiwi dollar fell to 81.85 Australian cents at 5pm in Auckland from 82.13 cents yesterday after Bureau of Statistics figures showed annual inflation accelerated to a pace of 4.6% in March, falling short of forecasts but firming up economists’ expectations for the RBA to lift the target cash rate 25 basis points to 4.35% next week.
The kiwi traded at 58.63 US cents from 58.99 cents yesterday after RBNZ governor Breman reiterated the central bank’s readiness to act if inflation from the energy shock beds in beyond an initial kneejerk reaction.
Statistics New Zealand’s March quarter household living cost price index showed the cost of living for the average household rose an annual 2.1% in the period, lagging behind the pick-up in consumer prices due to cheaper interest costs.
Reporting by Paul McBeth.
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