The New Zealand sharemarket made a small gain. Photo / NZME
The New Zealand sharemarket became a little diffident after it was known the country’s economic growth was stronger than expected and further interest rate rises were needed in the United States to combat inflation.
The S&P/NZX 50 Index fell at the opening after the US Federal Reserve increased its official rate 50 basis points to a 15-year-high range of 4.25-4.5 per cent.
The index then recovered after New Zealand third quarter gross domestic product (GDP) showed 2 per cent growth, stronger than the median analyst estimate of 0.9 per cent and stronger than the Reserve Bank’s forecast of 0.8 per cent. Private (household) consumption contracted 0.1 per cent.
But at the end of the day, the index was reasonably flat and closed at 11,601.99, up 16.99 points or 0.15 per cent after hitting a morning low of 11,508.16.
There were 56 gainers and 77 decliners over the whole market on heavy volume of 53.47 million share transactions worth $192.16 million.
Mark Lister, head of private wealth research with Craig Investment Partners, said it was an oddball day. “Everyone was hanging out for the Federal Reserve which did what it needed to do – increase the rate and talk tough about more rises to come, with no reductions until 2024.
“The US markets were happy, then unhappy and finished down a bit but not dramatically. They didn’t know what to make of it all,” Lister said.
“Our GDP figure was stronger than expected and that’s good and bad for the market. While the economy is holding up and proving resilient, it does tell us that the Reserve Bank will not be slowing things down as much and paves the way for further OCR rises.”
Auckland Mayor Wayne Brown created another talking point. Auckland International Airport, down 4c to $8.05, told the market it was not planning a capital raise despite the claim by Brown.
The claim that the airport would seek a capital injection to fund a new domestic terminal did provoke some earnest trading – 7.94m shares worth $64.45m changed hands.
The airport said “we continue to consult with airlines about our future infrastructure programme, which includes our priority project – the creation of a combined domestic and international terminal.” The new domestic terminal would be funded by borrowings.
Brown said the Auckland Council, an 18 per cent shareholder, would not participate in the airport’s capital expansion and those shares would reduce in value to about 11 per cent.
Leaders Fisher and Paykel Healthcare increased 80c or 3.6 per cent to $23.02; Ebos Group gained 82c or 1.91 per cent to $43.75; Mercury Energy was up 18c or 3.24 per cent to $5.73; and Contact gained 9c to $7.80.
Meridian Energy, down 1.5c to $5.04, told the market it will begin constructing the Ruakaka battery energy storage system south of Whangarei in the first quarter of next year. It is New Zealand’s first large-scale system and Meridian plans to build a grid-scale solar farm at Ruakaka.
PGG Wrightson increased 14c or 3.33 per cent to $4.34 after ASX-listed agribusiness Elders took an 11.295 per cent stake after buying 8.53 million shares worth $37.12m on-market. Elders said it didn’t plan to make a full bid for control at this juncture.
Channel Infrastructure was up 5c or 3.52 per cent to $1.47; Tourism Holdings gained 5c to $3.60; and Blackpearl Group recovered a further 6c or 13.64 per cent to 50c.
Ryman Healthcare hit a new low after falling 20c or 3.23 per cent to $6, and Summerset Group was down 10c to $9.15.
Synlait and a2 Milk ended their strong runs, dipping 15c or 3.98 per cent to $3.62 and 2c to $7.32 respectively.
Mainfreight declined $1 to $68; Chorus decreased 22.5c or 2.69 per cent to $8.15; Stride Property shed 3c or 2.1 per cent to $1.40; and Vista Group fell 8c or 5.19 per cent to $1.46.
Spark, down 1c to $5.24, confirmed it was talking with TVNZ about a potential content partnering agreement covering the majority of Spark Sport’s portfolio.
In another move, Spark’s shareholding in Connexa will be diluted from 30 per cent to about 17 per cent after Connexa buys 2degrees’ tower assets for $1.076 billion. There is no cash outflow for Spark as it won’t be contributing to the purchase. Connexa was formed following the sale of 70 per cent of Spark’s cell towers to Ontario Teachers’ Pension Plan in October.
Restaurant Brands, declining 8c to $6.30, has renewed its $370m loan facilities with Westpac, JPMorgan, Rabobank and Bank of China – the majority of the facilities in NZ, US and Australian dollars were due to expire in April.
Other decliners were Winton Land shedding 6c or 3.17 to $1.83; Eroad down 4c or 3.74 per cent to $1.03; Scott Technology decreasing 5c or 1.92 per cent to $2.55; Just Life Group falling 5c or 11.11 per cent to 40c; Task losing 2c or 5.13 per cent to 37c; and NZ King Salmon Investments down 2c or 8.890 per cent to 20.5c.