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Investors ignore weak GDP data

The kiwi dollar jumped more than half a cent after the US Federal Reserve held its policy settings, while the local equity market returned to its downward trend even though it seemed unfazed by weak GDP data.

Thursday, March 18th 2021, 6:50PM

by BusinessDesk

The New Zealand dollar was trading at 0.7160 pre-announcement and then shot through 72 cents. It was trading at 72.41 US cents at 5pm in Wellington, up from 71.82 cents yesterday.

The trade-weighted index was at 75.33 at 5pm, from 75.00 yesterday. The kiwi traded at 92.56 Australian cents from 92.86 cents, 78.84 yen from 78.36 yen, 60.53 euro cents from 60.35 cents, 51.93 British pence from 51.68 pence, and 4.7001 Chinese yuan from 4.6664 yuan.

The US Federal Open Market Committee maintained its existing policy settings, despite markets beginning to expect it might be forced to prevent possible inflation due to fiscal stimulus.

“The Fed acknowledged some improvement in economic activity and employment, although inflationary pressures remained weak and covid-19 continued to weigh on the outlooks,” ASB economist Mark Smith said.

Closer to home, data released this morning showed NZ’s gross domestic product shrank 1% in the December quarter, a much worse result than expected, but markets hardly reacted.

A note from BNZ bank said investors were right to be tolerant of the weak GDP number as a pullback was always likely after the massive 13.9% catch-up in the prior quarter.

Despite not reacting to the data release, the NZ sharemarket did fall after midday when Australia opened weaker.

The S&P/NZX 50 Index fell 126.07 points, or 1%, to 12,496.14. Within the index, 22 stocks fell, 21 rose and seven were unchanged. Turnover was $168 million.

Energy stocks again led the slide. Meridian Energy fell 4.7% to $5.46, Genesis Energy dropped 4% to $3.60, and Mercury NZ declined 2.8% to $6.25.

Travel stocks got a boost as more media reports echoed the likelihood of opening a travel bubble with Australia and the Pacific Islands next month, although the prime minister herself remained coy on the exact date. 

“The likelihood of a trans-Tasman bubble has increased materially in recent days as the New Zealand government appears to be responding to heightened political pressure to ease restrictions,” said Forsyth Barr analyst Andy Bowley. 

A travel bubble would provide relief for embattled airlines, airports and tourism operators on both sides of the Tasman, he said.

Auckland International Airport would stand to gain the most, he said, as 30% of 2019 passengers came from Australia. The airport’s share price climbed 2.1% to $7.76.

Tourism Holdings gained 4% to reach $2.60, although its benefit would be less dramatic, and Air New Zealand gained just half a percent at $1.81.

Cinema software firm Vista Group International had the day’s biggest gain, climbing 8.4% to $2.20 after US cinema chain AMC Entertainment said it would reopen nearly all of its U.S. theatres by the weekend.

Tags: Market Close

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Lender Flt 1yr 2yr 3yr
AIA 4.55 ▼2.25 2.59 ▲2.89
ANZ 4.44 2.89 3.25 3.39
ANZ Special - 2.29 2.69 2.79
ASB Bank 4.45 ▼2.25 2.59 ▲2.89
Basecorp Finance 5.49 - - -
Bluestone 3.49 3.34 2.99 3.34
BNZ - Classic - 2.29 2.59 2.79
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 2.89 3.19 3.39
BNZ - TotalMoney 4.55 - - -
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CFML Loans 4.95 - - -
China Construction Bank 4.49 4.70 4.80 4.95
China Construction Bank Special - 2.65 2.65 2.80
Credit Union Auckland 5.45 - - -
Credit Union Baywide 5.65 3.95 3.85 -
Credit Union South 5.65 3.95 3.85 -
First Credit Union Special 5.85 2.95 3.45 -
Heartland Bank - Online 2.50 1.99 2.35 2.45
Heretaunga Building Society 4.99 3.40 3.50 -
HSBC Premier 4.49 2.25 2.35 2.65
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - 2.25 - -
ICBC 3.69 2.25 2.35 2.65
Kainga Ora 4.43 2.67 2.97 3.13
Kainga Ora - First Home Buyer Special - 2.25 - -
Kiwibank 3.40 3.20 3.50 3.50
Kiwibank - Offset 3.40 - - -
Kiwibank Special 3.40 2.35 2.65 2.65
Liberty 5.69 - - -
Nelson Building Society 4.95 3.20 3.24 -
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The Co-operative Bank - First Home Special - 2.09 - -
The Co-operative Bank - Owner Occ 4.40 2.29 2.59 2.79
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TSB Bank 5.34 3.09 3.29 3.45
TSB Special 4.54 2.29 2.49 2.65
Wairarapa Building Society 4.99 3.55 3.49 -
Westpac 4.59 3.09 3.29 3.39
Westpac - Offset 4.59 - - -
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Westpac Special - 2.29 2.69 2.79
Median 4.55 2.73 2.99 2.89

Last updated: 23 April 2021 8:50am

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