The kiwi dollar sank to a six-month low against the greenback.
New Zealand’s S&P/NZX 50 index was one of the better performers across Asia after the Reserve Bank surprised some in the market with a 50 basis point cut to the official cash rate and left the door open for more to breathe life into a moribund economy.
Rate sensitive stocks such as retirement village operators, commercial landlords and utilities were among the day’s gainers, while SkyCity Entertainment Group led the bourse higher in heavy trading for the casino operator.
The kiwi dollar dropped to a six-month low against the greenback, boosting exporters such as Scales Corp and The a2 Milk Co.
Meanwhile, a decline in tech stocks across Asia was muted in New Zealand, with Gentrack and the data centre-exposed Infratil among those on the red side of the ledger domestically.
Targeting new heights
The NZX50 rose 37.19 points, or 0.3%, to 13,568.48, having climbed as high as 13.626.67 during the session, its highest level since the all-time peak in January 2021. Within the index, 38 stocks gained, 10 fell and two were unchanged. Turnover across the main board was $180.5 million, of which Fisher & Paykel Healthcare accounted for $23.1 million as it slipped 1.7% to $37.55.
The benchmark index was flatlining heading into the Reserve Bank’s announcement, getting a new lease of life when the central bank cut the official cash rate 50 basis points to 2.5% and said the monetary policy committee’s open to further reductions if needed.
The consensus decision went with the larger cut to boost spending and investment, given the risk of persistently subdued economic activity and employment. The kiwi dollar dropped to a six-month low against the greenback, trading at 57.48 US cents at 5pm in Auckland from 58.04 cents at 7am and 58.31 cents yesterday.
Casino operator SkyCity Entertainment Group led the NZX50 higher, climbing 5% to 74 cents on the heaviest volume of the day, with 14.9 million shares traded.
Among other heavily traded stocks, Spark New Zealand rose 1.3% to $2.40 on a volume of 8.7 million, Fletcher Building fell 2% to $3.41 with 3.2 million shares traded, and Air New Zealand was unchanged at 60 cents on a volume of 2.2 million.
Retailers were also among those pacing the benchmark, as KMD Brands rose 3.5% to 29.5 cents, Briscoe Group advanced 1.9% to $5.25 and Hallenstein Glasson Holdings increased 0.1% to $9.38.
“Sixty percent of market participants were expecting a 25 point cut, so there might be a bit of buying coming into the market today and tomorrow,” said Jeremy Sullivan, an investment adviser at Hamilton Hindin Greene. “It’s good to see the market react positively.”
Sullivan said the Reserve Bank’s catching up to the market’s expected path before US President Donald Trump announced the potentially inflationary tariff regime earlier this year.
“I understand the bind they must have been in, waiting on the rate decision until they had more certainty,” he said.
Sensitive souls
Interest rate sensitive companies were also stronger, with Summerset Group Holdings up 4.5% at $11.75, Property for Industry advancing 3.2% to $2.62, lines company Vector rising 2.8% to $5.07 and Meridian Energy increasing 2.8% to $5.96.
Courier operator Freightways, often seen as an economic bellwether, increased 1.7% to $13.88.
Exporters were generally stronger with the weaker kiwi dollar boosting the value their overseas income. Scales Corp gained 3% to $5.84, Skellerup Holdings increased 0.8% to $5.28, Sanford rose 0.3% to $5.90 and a2 Milk Co advanced 0.3% to $10.07.
Ryman Healthcare posted the biggest decline on the NZX50, falling 2.4% to $2.81, as it gave up some of its recent gains, while Port of Tauranga declined 2.2% to $7.85.
Stock markets were generally subdued across Asia, with tech stocks following Wall Street lower overnight, particularly in Hong Kong where the Hang Seng was down 1.1% in late trading. Australia’s S&P/ASX 200 index was marginally lower in late trading.
Gentrack was the only tech company in the top 50 to decline on the day, down 2.1% at $9.25, while Infratil – which counts the CDC data centres as its biggest investment – slipped 0.7% to $12.40.
Travel software firm Serko rose 1.8% to $2.80 and cinema analytics firm Vista Group International increased 0.3% to $3.04.
Fonterra Shareholders’ Fund units slipped 0.6% to $8.05 after dairy prices fell at the latest Global Dairy Trade auction, with whole milk powder falling 2.3% to US$3,696 a tonne.
NZX gained 2.5% to $1.42 after Australian investor Spheria Asset Management lifted its holding of the stock market operator to 6.2% from 5.1%.
Outside the benchmark index, Enprise surged almost 14% to 62.5 cents after announcing plans to buy back up to 5% of its issued shares to maintain an appropriate debt to equity ratio.
Reporting by Paul McBeth.
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