NZ shares up with inflation 'not too hot'

News that inflation is on the rise in the United States did not dampen the local sharemarket with investors feeling the result was not as bad as it could have been.

Monday, December 13th 2021, 8:11PM

by BusinessDesk

Greg Smith

The S&P/NZX 50 Index jumped 145 points, or 1.1%, to 12,994.19. Turnover was $229 million.

Markets across Asia were up on Monday as investors reacted to the consumer price index released on Friday night in the United States.

Greg Smith, head of retail at Devon Funds, said the inflation number was “not but not too hot” coming in at 6.8% year-on-year as expected.

“Investors were likely relieved that the inflation numbers did not overshoot expectations and that the headline rate did not start with a ‘7,’” he said.

Even so, the rate of inflation was the highest it has been since 1982 and will encourage the US Federal Reserve to taper its bond buying program faster when it meets this week.

Also buoying investor sentiment was the absence of any sign that the omicron covid variant was more dangerous than its predecessors.

The US Centre for Disease Control reported that the 43 cases in the country had resulted in only mild illness, adding to the narrative that it is more infectious but not more harmful.

“The market has seemingly taken a ‘glass half full’ view of omicron developments over the past week, presumably on optimism that it might lead to milder illness than delta,” said BNZ strategist Nick Smyth.

Some of the stocks worst affected by the pandemic had the largest upward swings on the market today.

Vista Group International led the index, jumping 7.6% to $2.42, Tourism Holdings was up 4% at $3.14, Serko gained 1.5% at $7, and Air New Zealand climbed 1% to $1.58.

On the other hand, Fisher & Paykel Healthcare also climbed 2.5% to $33, with the stock’s performance often linked to increased covid hospitalisations.

Mainfreight shares climbed 4.7% to $95 with the stock looking like it could run towards the $100 mark it fell short of in September. Chemical logistics firm DGL jumped 7.1% to $2.85.

Spark NZ declined 0.9% to $4.51 – it had been suggested by at least one analyst as a safe stock to buy if omicron caused another round of disruption, which now seems less likely.

The year’s sole IPO, My Food Bag Group dropped to another new low and is now trading at $1.11 having fallen 2.6% today.

Some investors are eying the stock as a value play with the share price so far below the $1.85 listing price, but many are too cautious to buy with inflation pressures posing a new risk to the meal-kit company.

The kiwi dollar was virtually unchanged since Friday, trading at 67.96 US cents at 3pm in Wellington.

Brian Martin, ANZ’s head of global economics, said the currency was holding relatively steady after gaining half a cent across the past week.

“Tempting as it is to think we might cruise into Christmas, we are not done for the year yet, and events this week could shake things up, particularly GDP, current account and the HYEFU,” he said.

Tags: Market Close