“Last year was all about rising interest rates, persistent inflation and a hard landing for economies. The worst-case outcome might not eventuate as more optimism creeps in and the rally so far this year continues,” said Smith.
The Federal Reserve increased its official rate an expected 25 points to a range of 4.5-4.75 per cent – its eighth consecutive hike but lower than the December 50 basis points rise and before then four increases of 75 basis points.
Fed chair Jerome Powell said “we can now say for the first time that the disinflationary process has started.” He added that the Fed would need to be restrictive for some time and it had more work to do.
“Ongoing increases in the target range will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 per cent over time,” Powell told the markets.
Smith said the European Central Bank and Bank of England were announcing their latest rate decisions overnight and they were likely to follow by moderating the pace of their hikes.
On Wall Street, the major indices were down on the interest rate announcement but turned around after Powell provided his commentary. The Dow Jones Industrial Average was flat at 34,092.96 points, S&P 500 was up 1.05 per cent to 4119.21, and Nasdaq Composite rose 2 per cent to 11,816.32.
At home, heavyweights Fisher and Paykel Healthcare gained 33c to $26.25; and Ebos Group rose 65c to $42.75.
Fletcher Building, expected to be a beneficiary of the Auckland flooding with more construction work, increased 9c or 1.71 per cent to $5.34; and Auckland International Airport picked up a further 7c to $8.69.
Mercury Energy continued a strong run, gaining 6.5c to $6.295, after rising 3.9 per cent the day before. Manawa Energy increased 10c or 1.86 per cent to $5.49.
The property sector strengthened as long-term interest rates start to fall. Stride gained 4c or 2.8 per cent to $1.47; Vital Healthcare Trust rose 7c or 2.98 per cent to $2.42; Goodman Trust was up 2.5c to $2.075; Kiwi added 1.5c to 96c; and Precinct collected 1c to $1.275.
SkyCity Entertainment increased 8c or 3.17 per cent to $2.60; Summerset Group was up 11c to $9.90; Port of Tauranga added 8c to $6.36; Winton Land collected 6c or 3.23 per cent to $1.92; Radius Residential Care rose 2.5c or 8.77 per cent to 31c; and PaySauce gained 1.5c or 5.26 per cent to 30c.
Investment funds Kingfish was up 4c or 2.82 per cent to $1.46; Barramundi increased 3c or 4.23 per cent to 74c; and Marlin Global gained 2c or 2.13 per cent to 96c.
Chorus was down 7c to $8.45; Mainfreight fell $1.85 or 2.56 per cent to $70.45; Ryman Healthcare gave up 9c to $6.77; Scales Corp declined 10c or 2.38 per cent to $4.10; Hallenstein Glasson decreased 10c or 1.79 per cent to $5.50; and Napier Port was down 5c to $2.98.
Insurer Tower slipped 0.005c to 66.5c as claims continue to roll in. The Insurance Council said overall 20,000 claims had been made so far, and the Auckland flooding was the biggest climate event to hit the country.
Other decliners were Green Cross Health down 8c or 5.76 per cent to $1.31; Bremworth falling 3c or 5.66 per cent to 50c; Accordant Group decreasing 4c or 2.37 per cent to $1.65; BlackPearl shedding 2c or 4.08 per cent to 47c; and NZ King Salmon Investments down 1c or 4.76 per cent to 20c.
AFT Pharmaceuticals, down 6c to $3.72, is developing an antibiotic eye drop in partnership with San Diego-based Latitude Pharmaceuticals which provides drug formulation development services.
The development programme is expected to take 3-4 years up to the point of regulatory filings and the cost will be included in AFT’s existing $12m research and development budget for each of the 2023 and 2024 financial years.
