Infratil had a strong day on the sharemarket. Photo / Supplied
Expectations of Official Cash Rate cuts from the Reserve Bank later this year helped drive the New Zealand sharemarket higher in light trade.
The S&P/NZX 50 closed 49.76 points or 0.4% up at 12,784.29, driven by the interest rate-sensitive stocks, with 32.7 million shares worth $111.7m trading.
There were 89 rises and 48 falls on the main board.
In the US, the S&P 500 edged back by 0.1% from Monday’s record close. The technology-dominated Nasdaq fell by 0.8%, partly reflecting a big fall in Tesla.
Among big-cap local stocks, Fisher & Paykel Healthcare gained 8c to close at $37.50 and Meridian Energy fell 4c to $5.84, while Ebos gained 27c to close at $39.39.
“In the interest rate market, we’ve seen a bit more of a decline in terms of these forward rate curves,” Harbour Asset Management senior portfolio manager Shane Solly said.
The Official Cash Rate (OCR) stands at 3.25%.
Few expect the bank to cut the rate further at its review next week, but a couple of dismal confidence surveys this week served to drive down interest rate expectations for later in the year.
“If I look at where the rate curve is now, there’s very little priced in for a cut by the Reserve Bank next week,” Solly said.
“But what is changing is that people are expecting a slightly more dovish tone, with the Reserve Bank potentially recognising the very modest ability of firms to put through price increases,” he said.
“Inflation expectations inside the band (1 to 3%) suggests that the central bank could continue to cut rates, consistent with those low inflation expectations.”
The interest rate market is pricing 18 basis points of cuts for August – not quite the full 25-basis-point cut.
Further out, market pricing suggests the OCR will be at 2.85% by next May.
With 90-day bills at 3.28%, Solly said that was helpful for some interest rate-sensitive stocks, such as those in the property sector, which had a better day.
Among them, Argosy was up 2.5c at $1.11 and Property for Industry firmed 5.5c to $2.33.
Infrastructure investor Infratil gained 19c to close at $10.64.
Solly said the market had adopted a less negative view of Infratil’s US solar business, Longroad, which had been under pressure from the US Government’s unwinding of the Inflation Reduction Act, which had heavily incentivised investment in renewable energy projects.
“We have a better idea of where that is now and the timeframes, but it’s probably not as aggressive as what people have previously thought,” Solly said.
A2 Milk gained 21c or 2.4% to $8.75 on expectations of better demand in China, its main market.
Black Pearl, a marketing data technology company, rallied by 20c (30%) to 91c after announcing that Bebop, its AI-driven sales product, had achieved annual recurring revenue of $1.2m in 45 days, making it the fastest-growing product in the company’s short history.
On the downside, Skellerup – which may feel the ill wind of new US tariffs – dropped 9c to $4.86.
Software company Gentrack fell 46c or 3.6% to $12.29 in line with a weakening trend in offshore technology stocks.
Trade software company TradeWindow firmed 1.2c to 19c after announcing a non-exclusive strategic partnership with Freight & Trade Alliance, an Australian body representing over 530 international supply chain businesses.
Gold miner Santana firmed one cent to 59c after announcing it had entered into a binding agreement to acquire outright Ardgour Station land for $25m.
Among the market minnows, Blis Technologies ended 0.7c higher at 2.2c.
The company had announced it had renegotiated a five-year extension with Bluestone Pharma to their existing supply agreement, which had been scheduled to expire this month.
Jamie Gray is an Auckland-based journalist, covering the financial markets and the primary sector. He joined the Herald in 2011.