David L. Nemec/AP
Traders await the release of June inflation data in the United States. (File photo)
- NZX 50 Index Gains 0.06%
- Investors take price rise in their stride
- US inflation figures threaten
The stock market rocketed after the Reserve Bank raised interest rates by 50 basis points, as expected.
The benchmark S&P/NZX 50 Index rose 0.06%, or 6.94 points, to 11,110.33 points on Wednesday. In the broader market, 66 stocks fell and 60 rose, trading $112 million in shares.
The Reserve Bank increased its official cash rate (OCR) to 2.5%, sticking closely to the accelerated path it set out in May to get on top of inflation. The “double rise” brings interest rates to their highest level since January 2016 and was widely expected by banking economists†
“The kiwi market was higher today, with investors largely following a rather benign OCR announcement,” said Greg Smith, chief of retail at Devon Funds Management. “There were no real surprises.”
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† Stocks trade moderately as investors await US interest rate decision
† NZX50 Index Loses Another 0.9%, Fisher & Paykel Healthcare Drops 0.7%
† S&P/NZX50 drops 1 percent, investors lose 7 percent of F&P Healthcare
“Officials continue to tighten at a pace that is tackling inflation that is the highest in decades,” he said.
Investors will now focus on Monday’s upcoming inflation report to see if inflation has peaked, he said.
Spark rose 1.4% to $5.06, contributing to its 1.9% gain on Tuesday after the telecommunications company announced it had sold a 70% stake in its mobile network to a Canadian investment fund for $900 million.
“The price achieved was a very strong price considering what comparable assets in the Tasman have been sold for,” said Smith.
Sky Network Television fell 2.9% to $2.32 after warning the new Sky Boxes would be delayed due to global supply chain challenges.
KMD Brands won 0.9% to $1.11. The retailer, which owns the Kathmandu, Rip Curl and Oboz Footwear brands, warned that full-year profits will decline after the Covid-19 pandemic disrupts retail.
Managing director Michael Daly said Kathmandu had a record winter promotional period in Australia and gross margins were “well above” in the second half of last year, thanks to a favorable currency and better promotional activity.
“The update from Kathmandu was impressive, with a record performance in the main winter promotion period, despite the impact of Omicron, including store closures and reduced staff availability,” Smith said. “Branding continues to rise for Rip Curl, which continues to trade strongly across retail and wholesale channels, as does the Oboz brand.
“This all bodes well for financial performance as trading conditions normalize. The company is doing well, helped by a particularly cold and wet start to the winter.”
CMC Markets analyst Tina Teng said Spark and other companies that had good prospects despite economic headwinds performed well.
Air New Zealand was up 2.5% to 62.5 cents, The a2 Milk Company was up 0.8% to $4.99 and Fisher & Paykel Healthcare was up 1.3% to $21.13.
Asian stock markets were higher as investors waited for inflation data in the United States that some concerns could lead to more rate hikes.
The S&P-ASX 200 in Sydney recovered from previous losses and remained stable at 6,606.30.
US futures moved higher and oil prices recovered from Tuesday’s plunge, but remained below $100 a barrel.
Wall Street’s benchmark S&P 500 index fell Tuesday ahead of the government’s release of consumer price data in June. A new round of company results will follow this week.
– With AP