Market close: NZ stocks rally after Reserve Bank OCR surprise call

Infratil chief executive Jason Boyes. The company's share price neared the $10 mark, rising 18c or 1.87 per cent to $9.81. Photo / Mark Mitchell

A surprised New Zealand sharemarket rallied nearly 1 per cent after the Reserve Bank indicated it was done with raising interest rates.

The S&P/NZX 50 Index had fallen to 11,862.42 points and then jumped to an intraday high of 11,995.27 when the Reserve Bank announced an expected 25 basis points rise in the official cash rate (OCR) to 5.5 per cent.

What wasn’t expected was the message that the bank still sees 5.5 per cent as the peak for the OCR and it expects rate cuts from the third quarter next year.

The index closed at 11,971.83, up 27.63 points or 0.23 per cent – a turnaround of about 0.9 per cent. There were 77 gainers and 49 decliners on the main board, with 32.25 million shares worth $133.3 million.

Wholesale interest rates fell and the NZ dollar weakened – from US62.50 before the bank announcement to US61.70c against the American greenback, and from A$94.60c to $93.50c against the Australian dollar.

Matt Goodson, managing director of Salt Funds Management, said the Reserve Bank was less hawkish than the market expected.

“There is some scepticism over whether the fiscal policy is contractionary and the Reserve Bank kept its head down on the Budget expansionary pressures. A key question now is how long does it take to get back to the upper inflation range of 3 per cent,” he said.

Infratil neared the $10 mark, rising 18c or 1.87 per cent to $9.81. Fletcher Building increased 13c or 2.68 per cent to $4.98; Meridian Energy added 6c to $5.50; a2 Milk was up 7c to $5.73; and Vulcan Steel improved 16c or 2 per cent to $8.17.

Kiwi Property gained 1.5c to 92.5c; Accordant Group rose 18c or 12 per cent to $1.68; Green Cross Health was up 7c or 5.26 per cent to $1.40; and Carbon Fund increased 4c or 2.34 per cent to $1.75.

Retirement village operators Summerset Group was up 28c or 3.2 per cent to $9.03, and Ryman Healthcare gained 4c to $5.99.

Oceania Healthcare, down 1c to 78c, reported a 7 per cent increase in annual revenue to $247.17m, a 5 per cent gain in operating earnings (ebitda) to $80.01m, and a net profit of $15.44m, down 75 per cent. It is paying a final dividend of 1.3c a share on June 21.

Oceania told the market that realised gains from new sales and resales increased 5 per cent to $59.4m and it delivered 233 units and care suites during the year.

Market leader Fisher and Paykel Healthcare was down 32c to $25.34; Contact Energy declined 5c to $7.95; Serko shed 11c or 3.49 per cent to $3.04; Synlait Milk decreased 6c or 3.8 per cent to $1.52; and Turners Automotive was down 9c or 2.37 per cent to $3.70.

Transport technology firm Eroad rose 6c or 10.34 per cent to 64c after reporting a 46 per cent rise in revenue to $165.23m and loss from continuing operations of $11.77m for the year ending March.

The revenue, with a 12-month contribution from Coretex, surpassed the guidance of $159m-$164m and Eroad is forecasting $175m-$180m for the 2024 financial year.

Napier Port, up 6c or 2.5 per cent to $2.46, recorded a 22.8 per cent rise in revenue to $62.25m and 3.3 per cent drop in net profit to $8.69m for the six months ending March compared with the previous corresponding period. It is paying an interim dividend of 1.7c a share on June 22.

Container volumes increased 5.7 per cent to 119,000 TEUs (20-foot equivalent units) and revenue was up 14.5 per cent to $34.5m. Bulk cargo increased 7.5 per cent to 20.6m, and the return of cruise ships brought further revenue of $1.5m.

Napier Port told the market that trading will be subdued in the second half because of the crop losses and damage to primary processing caused by Cyclone Gabrielle.

SkyCity Entertainment, which held an investor day, was down 4c to $2.28 after lowering its full-year operating earnings (ebitda) guidance to $300m-$310m, from $305m-$320m. SkyCity said electronic gaming machines performance was strong, table games were subdued, it is experiencing higher legal and compliance costs, and the Auckland carpark concession agreement was not yet settled.

Rakon gained 2c or 1.94 per cent to $1.05 after reporting a 5 per cent increase in revenue to $180.33m and a 30 per cent fall in net profit to $23.22m for the year ending March. It is paying a maiden dividend of 1.5c a share on August 8.

Operating earnings (ebitda) were $42.2m compared with $54.4m in the previous year, and are forecast to fall to $26m-$34m in the 2024 financial year. Rakon has completed its manufacturing centre in India and is producing advanced frequency and timing products from the telecommunications, space and defence sectors.

AoFrio, up 0.002c or 2.22 per cent to 9.2c, has revised its full-year revenue guidance to $80m-$90m, for a mid-point growth rate of 14 per cent rather than the previous 30 per cent. The margin on sales of motors has reduced.