New Zealand’s S&P/NZX 50 index gained in a mixed day across Asia as investors digested policy moves from the Reserve Bank of Australia and Bank of Japan, with rates kept unchanged across the Tasman and hiked in Japan. Exporters such as Fisher & Paykel Healthcare and Skellerup Holdings were buoyed by the weaker kiwi dollar, with Statistics New Zealand’s partial inflation reading prompting some economists to downgrade their forecasts for the pace of increased consumer prices and push out their expectations for when New Zealand’s
Reserve Bank will lift the official cash rate. Meanwhile, SkyCity Entertainment Group posted the steepest gain on the day, with cheaper oil prices set to provide a tailwind for tourism and travel companies when the Strait of Hormuz reopens. And Delegat Group jumped to a two-month high after the winemaker upgraded its earnings guidance. The NZX50 climbed 65.54 points, or 0.5%, to 13,426.13, with 22 stocks gaining, 20 stocks declining and eight unchanged. The S&P/NZX 20 index futures contract for June was unchanged at 7,580
with 1,144 lots traded for a value of $8.7 million, while the NZX20 rose 0.4% to 7,602.81. Turnover across the main board was $120.1 million, of which Infratil accounted for $15.1 million as it gained 0.7% to $15.05. Stock markets across Asia were mixed after the Bank of Japan raised its benchmark interest rate a quarter-point to 1% and the RBA kept its cash rate at 4.35%, both as expected, in an early sign of how central bankers would gauge the peace deal between the
US and Iran. The kiwi dollar dropped to 93.09 yen at 5pm in Auckland from 93.74 yen yesterday and declined to 82.37 Australian cents from 82.69 cents. The Federal Reserve’s policy review later this week is the main event for investors, given it’s the first with Kevin Warsh chairing the open market committee. “The RBA’s one of the first central banks to provide their thinking on inflation since the deal,” said Greg Smith, investment specialist at Generate Investment Management. Australia’s central bank board was unanimous
in holding the key rate unchanged, while acknowledging the inflation impulse from the energy shock and saying it would hike again if needed. Meanwhile, Stats NZ’s selected prices for May were softer than many economists predicted, and eased expectations for the Reserve Bank to hike next month. Mark Smith, a senior economist at ASB Bank, said the official cash rate will move higher, but softer details might give the central bank cause to delay its moves. “We currently assume a July start to OCR hikes
and a 3.25% OCR by year end,” Smith said in a note. “This is not a high conviction call, with risks tilted to a later start to OCR hikes and a more drawn-out hiking cycle.” Old faithful Utilities and property companies held for their reliable dividends were broadly stronger as investors reassessed the interest rate profile, with Meridian Energy providing the biggest tailwind to the NZX50 as it gained 3.1% to $5.98, while Contact Energy advanced 1.6% to $9.57. Precinct Properties New Zealand increased 1.5%
to $1.05 after it agreed to sell 50% of the PwC Tower in downtown Auckland’s Commercial Bay precinct as part of a new investment partnership with global investment firm PAG. Generate’s Smith said the deal freed up cash for Precinct to pursue another Auckland development nearby without raising capital. Exporters were mixed in the kiwi dollar’s softness, with F&P Healthcare climbing 1.2% to $38.60 and Skellerup jumping 3.1% to $6.67. The A2 Milk Co fell 2.2% to $7.20 after Chinese retail sales shrank last month
from a year earlier, missing economists’ forecasts. Scales Corp declined 1% to $6.19 and Fonterra Shareholders’ Fund units slipped 0.6% to $7.17. SkyCity led the NZX50 higher, jumping 8.3% to 52.5 cents on a volume of 5 million shares – the day’s most. Auckland International Airport advanced 1.5% to $8.57 and travel software developer Serko climbed 2.1% to $1.68, with falling oil prices set to revive international tourism. Ebos Group posted the biggest fall on the day after Forsyth Barr analysts cut their price target
on the company by $10 to $24 and downgraded their rating to ‘neutral’ from ‘outperform’, saying the medical products maker’s gradual return to earnings growth would likely constrain dividends for the coming years. Retailers, which are typically importers, were broadly weaker as Briscoe Group fell 3.1% to $4.64, KMD Brands slipped 1.3% to 7.9 cents and Hallenstein Glasson Holdings declined 0.1% to $10.10. Outside the benchmark index, Delegat soared 14% to $4.16 after the winemaker raised its earnings guidance on stronger fourth-quarter sales and a
helpful exchange rate. Reporting by Paul McBeth.
NZX50, kiwi dollar, Reserve Bank of Australia, Bank of Japan, Stats NZ, SkyCity, Meridian Energy, Fisher & Paykel Healthcare, Skellerup, Delegat