Inflation expectations remain in check.
New Zealand’s S&P/NZX 50 index joined the ASX lower as the Australian federal government’s plans to make housing more affordable for young people rocked the big four banks, with dual-listed Westpac Banking Corp leading the local bourse lower and ASB Bank-parent Commonwealth Bank of Australia on track for its biggest ever one-day decline.
The kiwi dollar drifted lower and government bond yields crept up after the Reserve Bank’s quarterly survey of expectations showed longer-term inflation expectations remained well-anchored, giving the central bank some breathing space to gauge whether prices are creeping higher beyond the energy shock’s impact on fuel.
Prime Minister Christopher Luxon signalled more fiscal restraint in the upcoming budget, with a smaller operating allowance for new spending and a commitment to bring down debt as a proportion of the economy.
Outside the benchmark index, Radius Residential Care gained after lifting its dividend, while fishing group Sanford extended its rally ahead of reporting tomorrow and ASX-listed local favourite Xero was on track to snap a five-day decline ahead of its annual result on Thursday.
The NZX50 fell 17.27 points, or 0.1%, to 13,063.06, with 25 decliners, 21 gainers, and four stocks unchanged. The S&P/NZX 20 index futures contract for June slipped 0.1% to 7,450 with 43 lots traded on a turnover of almost $320,000. The NZX20 fell 0.1% to 7,426.31.
Turnover across the main board was $206.8 million, of which Infratil accounted for $41.2 million as it slipped 1.5% to $15.15 and Fisher & Paykel Healthcare accounted for $37.3 million as it declined 0.4% to $34.15.
The local stock exchange joined Australia’s S&P/ASX 200 index lower, with the benchmark down 0.5% in late trading across the Tasman as CBA sank 11% to US$153.31 after the federal government pressed ahead with well-signalled plans to make housing more affordable for young people.
Dual-listed Westpac led the NZX50 lower, falling 4.5% to $42.58, while ANZ Group Holdings declined 2.6% to $41.60.
Separately, finance minister Nicola Willis signalled the National party will go to the election with a policy on how to grow state-owned lender Kiwibank, which is constrained by a lack of capital in competing more aggressively with its Australian-owned counterparts. Heartland Group Holdings rose 0.9% to $1.12.
Local tech stocks followed the Nasdaq’s soft lead, with Gentrack down 3.2% at $4, Serko declining 2.5% to $1.56 and Vista Group International sliding 1.4% to $2.12.
Spark New Zealand dropped 2.9% to $2.01 after Jarden analysts trimmed their target price on the telecommunications company by 20 cents to $2.27 and lowered their rating to ‘neutral’ from ‘overweight’.
The kiwi dollar traded at 59.40 US cents at 5pm in Auckland from 59.55 cents yesterday, while the yield on the 10-year government bond increased 4 basis points to 4.75% after the Reserve Bank’s quarterly survey of expectations showed managers saw inflation jumping on the coming year, but had more muted predictions beyond that.
“The Reserve Bank will be pretty happy with that – the market believes they’re a credible central bank that will do what is necessary to keep inflation where it needs to be,” said Mark Lister, investment director at Craigs Investment Partners. “The numbers suggest inflation expectations are well anchored on the medium- to long-term basis.”
Prime Minister Christopher Luxon said this month’s budget would continue his administration’s fiscal restraint and keep the focus on reining in debt, trimming $300 million from the operating allowance to $2.1 billion.
Energy companies were broadly stronger on the NZX, with Mercury NZ gaining 2.9% to $7.10, Contact Energy up 2.8% at $9.90, and Meridian Energy advancing 0.3% to $5.82, while Genesis Energy was unchanged at $2.49.
Stride Property posted the biggest gain on the day, up 4% at $1.16, while Property for Industry increased 2.1% to $2.43 and Goodman New Zealand rose 1% to $2.
Fonterra Shareholders’ Fund units gained 3.6% to $6.94 after milk prices rose at the latest Global Dairy Trade auction, while A2 Milk Co increased 0.9% to $7.77 and Synlait Milk jumped 4.3% to 49 cents.
Sanford rose for a fourth day, up 1.6% at $8.15, ahead of reporting its first-half result on Thursday, while ASX-listed Xero gained 0.6% to A$80.64 ahead of its annual result.
Outside the benchmark index, Radius rose 3.9% to 40 cents after lifting underlying earnings 17% and hiking its final dividend by more than expected to 1.2 cents per share.
AoFrio dropped 5.1% to 7.4 cents after it said the March quarter fell from a strong period a year earlier, but that the annual outlook was on track. It jumped 11% yesterday before the update.
And Pacific Edge slipped 3.5% to 16.8 cents when it resumed trading, with 1 million shares changing hands. The bladder cancer detection test maker raised $25.4 million in a placement to institutions at 17 cents per share, and will raise a further $6 million in a retail offer at the same price.
Reporting by Paul McBeth.
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