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Shares down & dollar up as market predicts rate hike

New Zealand benchmark equity index declined 1.5% this week after its third consecutive fall today, while the kiwi dollar rallied on a possible cash rate hike next month.

Friday, September 10th 2021, 6:45PM

by BusinessDesk

The S&P/NZX 50 Index fell 31 points, or 0.3%, to 13,064.39. Turnover was $165 million.

Meanwhile, the kiwi dollar climbed back to 71 US cents as the market priced in an official cash rate slightly above 0.5% in October.

BNZ’s Nick Smyth said this implied the market thinks it is more likely the Reserve Bank of New Zealand will hike the official cash rate 50 basis points, rather than leave the rate on hold.

“The drift higher in October pricing this week has mirrored the decline in new covid-19 cases, which fell to 13 yesterday,” Smyth said in a note.

While a 50 point hike may be considered more likely than no hike at all, the consensus is for a 25 point increase in October and another later in the year.

“Analysts’ expectations for the process of monetary policy normalisation firmed this week as New Zealand appears to have successfully quashed yet another covid-19 outbreak,” currency exchange OFX said in a note.

The kiwi dollar was also trading at 96.39 Australian cents - its highest in more than 12 months.

The NZ share market also continued to normalise after seeing some strong gains and as the higher interest rates weigh. 

Fishery firm Sanford led the index lower, falling 3.3% to $5.03 – still up 13% from when Ngāi Tahu Holdings bought a 19.9% stake on-market last week.

Internet infrastructure firm Chorus declined 2.8% to $6.85, followed by Sky Network Television which dropped 2.3% to 21 cents.

Shares in meal-kit company My Food Bag retreated from elevated prices as investors saw the end of lockdown in sight.

The stock climbed as much as 13% during lockdown, despite management warning the company may not get the same boost in sales as it did last year.

Today, My Food Bag fell 2.1% to $1.36 as covid numbers continue to fall and much of the country finishes the week at alert level 2.

Infratil had the day’s good news story, as investors reacted positively to its plan to invest more than $300 million to set up a renewable energy operation in Asia.

The company, called Gurin Energy, will aim to emulate the success Infratil’s similar platforms in the United States and Europe have had.

Shares in the infrastructure investor climbed 1.8% to $7.60 following the news.

Retail stocks also made gains, perhaps buoyed by the prospect of lockdowns ending.

Kathmandu climbed 2.8% to $1.46 and Michael Hill International rose 2.4% to 87 cents.

Tags: Market Close

« Profit taking pulls NZ shares downWho would have thought: Shares rise despite lockdown extension »

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AIA 4.55 2.85 3.25 3.55
ANZ 4.44 ▲3.39 ▲3.85 ▲4.09
ANZ Blueprint to Build 1.68 - - -
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ASB Back My Build 1.79 - - -
ASB Bank 4.45 2.85 3.25 3.55
Basecorp Finance 5.49 - - -
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BNZ - Classic - 2.85 3.25 3.55
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BNZ - Std, FlyBuys 4.55 3.45 3.85 4.15
BNZ - TotalMoney 4.55 - - -
CFML Loans 4.95 - - -
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China Construction Bank Special - 2.65 2.65 2.80
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Credit Union Baywide 5.65 3.95 3.85 -
Credit Union South 5.65 3.95 3.85 -
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Heretaunga Building Society 4.99 3.80 3.90 -
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HSBC Premier 4.49 2.19 2.45 2.69
HSBC Premier LVR > 80% - - - -
HSBC Special - 2.25 - -
ICBC 3.69 ▲2.45 ▲2.85 ▲3.15
Kainga Ora 4.43 2.88 3.28 3.59
Kainga Ora - First Home Buyer Special - 2.25 - -
Kiwibank 3.75 ▲3.80 ▲4.00 4.34
Kiwibank - Offset 3.75 - - -
Kiwibank Special 3.75 ▲2.95 ▲3.15 3.49
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The Co-operative Bank - Standard 4.40 ▲3.35 ▲3.75 ▲3.99
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Last updated: 29 September 2021 8:51am

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