The same trend occurred against the Australian dollar, with the NZ dollar finishing and starting at roughly 90.5 cents. The yield on a 2-year government bond climbed a little, again on the prospect of more interest rate hikes, but bond traders were already pricing in some upside risk to inflation.
ANZ Bank had one of the few research teams that changed its official cash rate forecast following the news. It is now predicting the central bank to push through an extra 50 basis point increase, to ultimately reach 4 per cent.
Other economists are sticking with their expectations that rates will top out at 3.5 per cent, including Jarden economist and investment strategist, John Carran.
"While despondency about the high June quarter inflation result is understandable, the inflation news is likely to get better going forward for several reasons," he said.
There are signs that global inflation pressures are fading, he said. Commodity prices have been declining in recent months, which should flow through to lower food and petrol prices.
"However, there will be some residual inflation that will likely be hard to shift as a tight labour market and catchup wage increases cause recent high inflation to reverberate to an extent," he said.
Slightly higher than expected inflation didn't seem to scare equity investors, with the benchmark index climbing – albeit on ultra-light volume. Mercury Energy led the way, climbing 3.2 per cent to $6, followed by Genesis Energy, which was up 3.1 per cent at $2.82. Electricity stocks are generally considered safe havens from inflation.
Exporters Scales Corp and Skellerup Holdings were both stronger, likely helped by the weak NZ dollar. The former rose 2.9 per cent to $4.32 and the latter 2.2 per cent to $5.16. On the flipside, A2 Milk dropped 1.6 per cent to $4.89 after it got another analyst downgrade – this time from Forsyth Barr.
Analyst Matt Montgomerie of Forsyth Barr said a resurgence of domestic infant formula brands and a sharp decline in birth rates left the stock looking expensive relative to its likely growth rate.
Retirement village operators also declined today, after Jarden analysts trimmed 6 per cent off their target prices for stocks across the sector in a note on Friday. Oceania Healthcare had the biggest fall, down 2.1 per cent at 92 cents, followed by Argosy which declined 1.5 per cent to $1.275. Jarden's preferred retirement investment, Summerset Holdings, rose 1.2 per cent to $10.11.
Australia & New Zealand Banking Group said it will raise A$3.5 billion to help fund its purchase of Queensland rival Suncorp Bank. The dual-listed bank also ended talks about a potential purchase of accounting software firm MYOB. ANZ's dual shares were placed on a trading halt. They closed at $23.95 on the NZX on Friday.
The fully underwritten pro-rata offer – at A$18.90 per share, a 12 per cent discount on Friday's close on the ASX – will be open to eligible institutional and retail shareholders. Investors will be entitled to one new share for every 15 held as of Thursday this week.
- BusinessDesk
