An unexpected higher inflation rate and maintaining the status quo for Auckland's Covid restrictions failed to shake the New Zealand sharemarket on a flat trading day.
The S&P/NZX 50 Index actually rose sharply following Prime Minister Jacinda Ardern's announcement that Auckland will remain in alert level 3 for at least another two weeks. But the index then dipped again, closing at 12,998.51, down 13.67 points or 0.11 per cent. It reached an intraday high of 13,060.91.
There were 61 gainers and 73 decliners over the whole market on light volume of 44.44 million share transactions worth $127.46 million.
The Consumer Price Index surged 2.2 per cent in the September quarter – the highest since the June 1987 quarter at 3.3 per cent – and annual inflation is now running at 4.9 per cent, and was ahead of economists' forecasts of between 4.2 and 4.5 per cent.
Greg Smith, head of retail for Devon Funds Management, said the inflation numbers were a bit of a surprise. It reaffirmed the Reserve Bank's move to increase the official cash rate.
"Rising inflation, as long as it's not out of control, is a net positive for the market as companies can look forward to enhanced asset prices and earnings. There are cost pressures across the board and businesses are trying to pass the costs on," he said.
"With a healthy job market and pent-up spending caused by the Covid restrictions, consumers should be able to suck up the higher prices."
Smith said the market has again taken the continuing Covid lockdown in its stride.
Northland will move into level 2 on Wednesday and Waikato's level 3 restriction will be reviewed on Friday. At that time Auckland and the rest of the country will learn about the Covid protection framework and the pathway to reopening.
There were few major moves on the market. Global transport and logistics operator Mainfreight rebounded $2.10 or 2.41 per cent to $89.35. The company told the market its New Zealand operations manager Craig Evans was leaving at the end of January after 34 years service.
New Zealand Oil & Gas, active in oil and gas fields in Australia and Indonesia, rose 4.5c or 8.26 per cent to 59c; and Gentrack was up 10c or 5.65 per cent to $1.87.
NZME, up 5c or 4.42 per cent to $1.18, has extended the financing period to October 22 for Global Marketplace New Zealand's $17.5m purchase of GrabOne.
Arvida Group resumed trading and increased 2c to $2.10 after successfully making a $155m placement at $1.96 a share to help pay for its $345m purchase of six Arena Living retirement villages in Auckland and Tauranga. A $175m renounceable rights offer, priced at $1.85 a share, will open on October 27.
Smith said Arvida's deal is a sign of corporate optimism as it is expanding its retirement village footprint by another quarter.
Fellow retirement village operators Ryman Healthcare fell 20c to $14.80, and Summerset Group Holdings was also down 20c to $14.75.
Ebos Group was up 15c to $34.50; Infratil increased 6c to $8.34; Turners Automotive picked up 8c or 1.83 per cent to $4.44; PGG Wrightson gained 5c to $4; EROAD collected 10c or 1.8 per cent to $5.65; Third Age Health Services rose 9c or 3.27 per cent to $2.84; and marketing firm Solution Dynamics was up 8c or 2.8 per cent to $2.94.
Spark was down 7c to $4.59; a2 Milk declined 12c to $6.96; Restaurant Brands shed 20c to $14.80; Vista Group fell 11c or 4.33 per cent to $2.43; Delegat Group declined 23c to $14.25; South Port New Zealand decreased 10c to $9.10; and Rakon lost 6c or 3.7 per cent to $1.56.
Utilities software firm ikeGPS rose 3c or 3 per cent to $1.02. The company earlier told the market that Rick Christie is stepping down as chair but will remain a director, and will be replaced by Los Angeles-based Alex Knowles to lead the board.
T&G Global downgraded its latest profit forecast to $4m-$10m, compared with $16.6m in the 2020 financial year. The profit is affected by shipping delays, impacts on pricing and costs, and store closures and labour shortages for fresh produce because of Covid-19. T&G's share price was unchanged at $2.95.
Australasian distributor Vulcan Steel, established in 1995 and based in Tauranga, is planning to list on the ASX and NZX exchanges on November 4 at A$7.10 ($7.43). Vulcan's 46 shareholders including founder Peter Wells are selling down their stakes by 40 per cent and raising A$371.5m. Vulcan would have a market capitalisation of $976m.