NZ shares rise as Fed rate hike misses the mark

It was a busy day for New Zealand’s stock market as stocks rallied after the US Federal Reserve’s rate hike.

Thursday, May 5th 2022, 6:34PM

by BusinessDesk

The S&P/NZX 50 index rose 72.3 points, or 0.6%, to 11,747.57. Within the broader equity market, 89 stocks rose, 43 fell and turnover was $105 million.

Inflation is on everyone’s minds as the pandemic rages on, Russia’s military invasion of Ukraine has detrimental geopolitical effects and the cost of almost everything is rapidly rising.

The Fed’s decision to hike the federal funds rate by 50 basis points – the biggest jump in 22 years – to a band of 0.75% to1% was expected by many investors although some wondered whether the hike might’ve been bigger.

Craigs Investment Partners head of private wealth research Mark Lister said NZ’s stock market had seen a “pretty big rally” due to the Fed’s hike.

“Markets everywhere also really liked the fact that the Fed tanked the idea of even bigger hikes and poured cold water on that view,” Lister said.

Kiwibank economists said the Fed’s decision weighed on the US dollar as the prospect of super-aggressive rate hikes was “taken off the table”.

“The kiwi dollar benefitted from the slip in the US dollar and risk sentiment also improved,” they said.

Tina Teng, an analyst from CMC Markets, said investors now projected the fed funds rate will get hiked half a percentage point in each of the fed’s meetings for the rest of the year.

Some stocks take a tumble

Air NZ shares dropped to match the price set in a bookbuild allocating the rights not taken up in the airline’s $1.2 billion equity offering. 

This followed investors buying 274m shares at 81 cents each in the shortfall bookbuild, meaning those Air NZ shareholders who chose not to take up their right to buy cheap shares would receive the 28c premium.

The airline’s shares had been at 87c before trading was halted to allow the bookbuild to take place, and fell as much as 6.9% to 81c, closing at 82c, down 6.3% in the biggest decline on the NZX50.

NZME’s shares were down 1.4% to $1.44, following data provider GfK releasing the latest radio rankings in its first commercial audience radio survey of the year, showing NewstalkZB was the country's number one commercial radio network. ZB secured a cumulative weekly audience of 744,000 people, up from 713,000 in the December survey.

Utility pole management company ikeGPS ended the day down 6.9% at 81c and was one of the weakest performers across the wider market. It had enjoyed a good week following the company's announcement it had signed contracts worth $26m which would add between $15m and $17m to its 2023 financial year revenue.

DGL Group was down 2.4% at $4.05 as well after chief executive Simon Henry was criticised over comments he made about My Food Bag co-founder Nadia Lim, and KiwiSaver provider Kiwi Wealth said it wouldn’t invest in the logistics firm.

ANZ Bank and Westpac Banking also fell 2.7% to $29.63 and 0.2% to $26.49 today.

ANZ’s NZ arm yesterday reported an 18% increase in first-half profit of $1.1b.

Winner, winner, chicken dinner

Briscoe Group had a good day after announcing first-quarter sales of $176.2m, up 1.8% from the $173.1m achieved for the same quarter of last year.

The group’s first-quarter sales in the homeware segment increased by 2.1% to $106.8m, while sporting goods sales increased by 1.2% to $69.4m. The homewares and sporting goods retailer's shares were up 2.6% to $5.95 today.

Rival Warehouse Group led the benchmark index higher, up 4.9% at $3.40.

Transport tech and vehicle telematics company Eroad was also up 3.6% at $3.46.

Retirement living provider Ryman Healthcare was up 1.2% to $8.97. Minnow Radius Residential Care was down 4.8% to 40c.

Fisher & Paykel Healthcare rose 1.2% to $21.50 and Green Cross Health was up 1.5% at $1.36.

Pushpay Holdings was up 2.7% to $1.36, and Lister said tech stocks such as Pushpay would’ve been supported by the Fed’s actions.

The NZ dollar was trading at 65.37 US cents at 3pm in Wellington, up from 64.46 cents yesterday.

Tags: Market Close

« Investors stick to sidelines ahead of ‘colossal’ Fed meetingNZ shares had a bad hangover after a rough night globally »

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