Market close: NZ shares rise as eyes turn to US inflation figure

Photo / NZME

Telco Spark is trading at a 22-year high as the New Zealand sharemarket stumbled following the half per cent rise in the official cash rate (OCR).

The S&P/NZX 50 Index dropped after the expected mid-afternoon Reserve Bank announcement. But the market and the index continue to stabilise, closing 6.94 points or 0.06 per cent ahead at 11,110.33 after hitting an intraday low of 11,099.69.

There were 60 gainers and 66 decliners over the whole market on another light trading day of 30.4 million share transactions worth $111.63 million.

The bank increased the OCR to 2.5 per cent with its third successive 50 basis points hike, saying "it remained appropriate to continue to tighten monetary conditions at pace to maintain price stability and support maximum sustainable employment."

Jeremy Sullivan, investment adviser with Hamilton Hindin Greene, said the market had already priced in the OCR rise, and the bank has not deviated from its path of taking the rate to 3.9 per cent through next year.

"The bank did say low net migration was putting pressure on a strained labour market. But the currency and markets were little changed though swap rates have come down, suggesting the OCR may not go quite as high," he said.

All eyes will be on the latest United States inflation rate announced overnight, presently sitting at 8.6 per cent. New Zealand's rate is 6.9 per cent and the second quarter consumer price index will be released on Monday.

It will be a test on whether inflation has peaked or is still rising. "All bets will be off if the US inflation rate goes over 8.9 per cent," said Sullivan.

Spark, which is selling 70 per cent of its cell towers business for $900m, continued to rally, rising 7c to $5.06. It reached $5.03 in late August 2020.

Previously known as Telecom till the rebranding in 2014, Spark was trading around $7 in 2000 before it was heavily regulated by the government and the share price drifted to $1.50 by the end of June 2010.

Spark has been climbing back ever since. Sullivan said Spark is seen as a stable blue-chip stock with a good dividend yield and growth prospects with the roll-out of 5G.

"The $900m sale gives Spark strong cash flow and the potential of a special dividend to the shareholders," he said.

Market leader Fisher and Paykel Healthcare increased 28c to $21.13 on trade worth $16.22m. Telecommunications network provider Chorus was up 20c or 2.76 per cent to $7.44.

The leading retirement village stocks bounced back – Summerset Group Holdings was up 28c or 2.81 per cent to $10.25 and Ryman Healthcare gained 11c to $8.80.

Air New Zealand increased 1.5c or 2.46 per cent to 62.5c; a2 Milk collected 4c to $4.99; Synlait gained 4c to $3.37; Fonterra Shareholders' Fund improved 6c or 1.93 per cent to $3.17; and SkyCity Entertainment picked up 4c to $2.64.

KMD Brands (formerly Kathmandu) increased 1c to $1.11 after updating the market on trading performance for the year ending July. Total sales are expected to be $955m-$965m and operating earnings (ebitda) $88m-$94m. The Covid impact on first-half ebitda was $35m. Sales in the 2021 financial year were $922.87m and ebitda was $113.3m.

Fellow retailer Michael Hill International was down 4c or 3.23 per cent to $1.20.

Property company Stride gained 5c or 2.84 per cent to $1.71; and Pacific Edge was up 2c or 2.9 per cent to 71c.

Mainfreight was down $1.03 to $70.95; Infratil decreased 9.5c to $7.895; Port of Tauranga shed 18c or 2.74 per cent to $6.40; South Port New Zealand dropped 8c to $7.40; Freightways declined 15c to $9.80; and Skellerup Holdings was down 10c or 1.94 per cent to 5.05.

Among the energy stocks, Meridian declined 10c or 2.04 per cent to $4.79; Manawa decreased 8c to $6.08; and Vector was down 7c to $4.26.

Restaurant Brands dropped 31c or 2.78 per cent to $10.83; Serko decreased 8c or 1.95 per cent to $4.02; Tourism Holdings fell 9c or 3.54 per cent to $2.45; Harmoney was down 3c or 3.37 per cent to 86c; and Steel & Tube declined 3c or 2.26 per cent to $1.30.

Sky Network Television declined 7c or 2.93 per cent to $2.32 after telling the market that the introduction of the new Sky Boxes into homes has been delayed to the coming Spring because of the global supply chain challenges, particularly chipset shortages.

ANZ Banking Group gained 10c to $24.95 after confirming chatter that it was in discussion with Kollberg Kravis Roberts & Co about buying accounting system MYOB.

Booster Innovation Fund has added ammonia manufacturer Liquium to its portfolio with an investment of $500,000. Liquium is developing cost-effective technology to reduce carbon emissions and pave the way for small-scale green ammonia production. Booster's share price was unchanged at $1.33.