Skellerup gained 8c or 1.82% to $4.47 on a day when there were 26.47 million share transactions overall. Photo / NZME
The New Zealand sharemarket pushed to a 29-month high as inflation fell significantly, raising hopes that early interest rate cuts are on their way.
The S&P/NZX 50 Index picked up from an early-morning fall and closed at 12,292.03, up 107.54 points or 0.88% after reaching an intraday low of 12,159.72. The previous best close was 12,413.05 points on February 10, 2022.
There were 91 gainers and 46 decliners over the whole market on volumes of 26.47 million share transactions worth $101.11m.
The June consumers price index (CPI) showed annual inflation running at a three-year low of 3.3%, down from 4% at the end of March and below the Reserve Bank’s expectation of 3.6%.
ANZ Research said the latest CPI data highlighted that weak demand and increasing spare capacity across the economy was flowing through to lower domestic inflation outcomes.
“There is an enormously wide gulf between the Reserve Bank’s May monetary policy statement forecast of no cuts until August 2025 and both economists’ evolving forecasts and particularly (spectacularly) current market pricing. But the Reserve Bank is not afraid to change its mind when the facts change.”
ANZ is now expecting a 25-basis-points cut (from 5.5%) in the official cash rate in November rather than February – and even possibly in October. “Beyond that, we are forecasting a steady run of 25-basis-point cuts at each meeting to a terminal rate of 3.5%.”
Greg Smith, head of retail with Devon Funds Management, said we are seeing globally a move towards reducing interest rates – the US market is pricing a 100% certainty of a rate cut in September.
“The market has responded with a rotation away from the racier names – the Magnificent Seven tech stocks have been on a tear this year – to the cyclical stocks.”
The small cap US Russell 2000 Index has risen 10% in the past week. The Dow Jones Industrial Average surged 742.76 points or 1.85%, to close at a new high of 40,954.48 points – its best trading session since June last year.
At home, Fisher and Paykel Healthcare was up 34c to $31.68; Mainfreight increased $1.14 to $76.90; Port of Tauranga collected 14c or 2.5% to $5.74; Skellerup gained 8c or 1.82% to $4.47; Freightways added 22c or 2.67% to $8.45; and a2 Milk was up 13c to $7.76.
Retirement village operators Summerset was up 22c or 2.33% to $10.54; Ryman Healthcare improved 19c or 4.63% to $4.29; Oceania Healthcare gained 2c or 3.57% to 58c; and Arvida Group increased 5c or 5.1% to $1.03.
Technology stocks Serko gained 9c or 2.44% to $3.78 and Blackpearl Group increased 5c or 8.33% to 65c.
Retailers Briscoe added 8c or 1.97% to $4.14, Hallenstein Glasson was up 9c to $5.55; KMD Brands gained 1c or 2.67% to 38.5c; and The Warehouse increased 3c or 3.06% to $1.01.
Argosy Property, up 1c to $1.055, has extended its syndicated bank facilities with ANZ, BNZ, Westpac, Commonwealth Bank Industrial and Commercial Bank of China, with lending tranches totalling $525m through to October 2029.
As for other property stocks, Goodman Trust was up 4.5c or 2.22% to $2.07, and Vital Healthcare Trust gained 4c or 2.13% to $1.92.
Synlait Milk was down a further 2c or 6.25% to 30c after withdrawing its full-year operating earnings (ebitda) guidance because of “unforeseen year-end timing differences between July and August for manufacturing and shipping” along with additional costs to the strategic review and deleveraging plan.
Synlait said its final result will be below the previous guidance of $45m-$60m, excluding a non-cash adjustment of $17m.
Mercury Energy, down 4c to $6.91, reported hydro generation fell 21% from last year’s record in the three months ending June but was slightly higher than average at 4096GWh.
Total generation was 8780GWh, 3% lower than the previous corresponding period, with geothermal up 11% at 2622GWh and wind 40% higher at 2062GWh.
Other energy stocks Meridian rose 12c or 1.78% to $6.88; Genesis gained 9c or 4.15% to $2.26; and Manawa was up 7c to $4.23.
Auckland International Airport was down 11c to $7.79 after being told by the Commerce Commission its targeted weighted average cost of capital is higher than what it considers to be reasonable.
The commission said the airport’s planned capital expenditure, including the new domestic terminal, appeared reasonable. The airport told the market it would consider reducing landing charges once it received the commission’s final report – any changes would apply from July next year to June 2027.
Other decliners were Turners Automotive down 7.5c or 1.8% to $4.10; AFT Pharmaceuticals shedding 11c or 3.61% to $2.94; Comvita decreasing 6c or 4.8% to $1.19; PGG Wrightson falling 10c or 4.65% to $2.05; and Bremworth down 3.5c or 7.69% to 42c.