A2 Milk hits five-month high - Market close

A2 Milk increased a further 8c to $5.13, its highest level in five months.

The New Zealand sharemarket, trading flat, shrugged off a Reserve Bank view that interest rates will have to stay higher for longer. But the voluntary administration of Godfreys will bring some uncertainty to the retail sector.

The S&P/NZX 50 Index dipped in the morning to 11,863.8 but recovered well to close at 11,9144, up 2.51 points or 0.02 per cent.

There were 72 gainers and 66 decliners over the whole market on volumes of 21.85 million share transactions worth $95.98. Auckland International Airport was down 14c to $8.45 on trade worth $26.82 million.

Reserve Bank chief economist Paul Conway indicated that the battle with inflation was not yet over, though monetary policy is working. He said globalisation may become less of a disinflationary force than it has been.

“This means we should not expect substantial declines in imported inflation to achieve our inflation target. Instead, home-grown or domestic inflation would need to be lower than it has been historically.”

Conway said he wasn’t going to give away anything about the future path of the official cash rate.

ANZ Research said the speech was not designed to have a big impact on market pricing and it didn’t. ANZ continues to believe that solid progress in the inflation fight will allow the Reserve Bank to begin cutting the official cash rate in August, and it doesn’t think there will be a rate rise next month (it meets on February 28).

Greg Smith, head of retail with Devon Funds Management, said the Reserve Bank chief economist’s hawkish comments pushed back on the prospect of any rate cuts.

“The market has already accepted that the Reserve Bank is going to be conservative in the unwinding of the previous rate rises,” he said.

Unlisted retailer Godfreys, a household name in vacuum cleaners, went into voluntary liquidation after experiencing a 2.7 per cent fall in sales last month – its biggest monthly drop since the Covid lockdowns in 2020.

Godfreys has 141 stores in Australia and New Zealand and employs 600 people. A further 28 stores are run by franchisees.

Smith said the Godfrey collapse highlights the challenges facing the retail sector with the cost-of-living pressures and people coming off very low mortgage rates.

Across the Tasman, the S&P/ASX 200 Index is closing in on its record high of 7628.9 points, set in August 2021. The index had risen 0.23 per cent to 7596.1 points at 6pm NZ time.

At home, Ebos Group was up 73c or 1.99 per cent to $37.50; Mainfreight gained 66c to $71.10; Spark recovered 6.5c to $5.32; Summerset Group added 22c or 2.02 per cent to $11.09; and a2 Milk increased a further 8c to $5.13, its highest level in five months.

Amongst the retailers, Briscoe Group was down 13c or 2.86 per cent to $4.42; Hallenstein Glasson declined 16c or 2.87 per cent to $5.41; KMD Brands decreased 3c or 4.05 per cent to 71c; and The Warehouse was up 2c to $1.60.

Online travel provider Serko increased 11c or 2.72 per cent to $4.16 after announcing that Silicon Valley technology entrepreneur Dr Sean Gourley has appointed been to the board as an independent director.

Vista Group was up 9c or 5.81 per cent to $1.64; Ventia Services gained 6c or 1.76 per cent to $3.46; Eroad added 3c or 3.3 per cent to 94c; Foley Wines rebounded 2c or 1.8 per cent to $1.13; Colonial Motor Company increased 17c or 1.97 per cent to $8.79; and 2 Cheap Cars was up 3c or 3.85 per cent to 81c.

SkyCity was up 4c or 2.16 per cent to $1.89; Millennium & Copthorne Hotels NZ gained 3c to $1.95; Stride Property rose 5c or 3.65 per cent to $1.42; and Steel & Tube improved 3c or 2.65 per cent to $1.16.

Infratil declined 16c to $10.71; Freightways was down 12c to $8.56; Fletcher Building shed 4c to $4.68; Synlait Milk decreased 3c or 3.57 per cent to 81c; Move Logistics gave up 1.5c or 2.94 per cent to 49.5c; and NZME fell 5c or 4.85 per cent to 98c.

Comvita was down 6c or 2.65 per cent to $2.20, matching its lowest level in five months.

Vector, decreasing 1c to $3.76, told the market that electricity connections in Auckland increased 2.2 per cent to 619,996 for the year ending December and gas connections were up 1.3 per cent to 120,302.

Distributed electricity volumes for Vector’s final six months increased 3.9 per cent to 4546GWh, with residential up 6.8 per cent and business 1.6 per cent.