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The Markets

Investors focused on inflation as shares meander

The New Zealand sharemarket had another meandering day with investors focused on the latest inflation data and when interest rates will start falling.

Thursday, April 13th 2023, 6:22PM

by BusinessDesk

The S&P/NZX 50 Index was up 13.36 points or 0.11% to 11,930.86, helped by a late surge in the end-of-day matching session. The index had earlier fallen to an intraday low of 11,880 points.

There were 74 gainers and 59 decliners over the whole market on a volume of 37.8 million shares worth $120.04 million.

A cooling United States inflation rate had little impact on the local market which is awaiting next week’s release of NZ’s March consumer price index (CPI).

The US March CPI increased by 0.1% and inflation is now running at 5% – slightly better than the economists’ predictions of 0.2% and 5.1%. It was the slowest pick-up in prices in nearly two years.

But core inflation, excluding falling gas prices, is still persistent at 5.3% and the feeling is interest rates will need to stay higher for a little longer, with the Federal Reserve expected to increase rates a further 25 basis points next month.

Investors have looked elsewhere. Gold is in a happy place, trading at US$2,017.07 (NZ$3,250.11) an ounce and bouncing back from US$1,815.10 on March 8. Bitcoin increased 0.73% to US$48,455.84 after starting the year at US$26,130.48.

Picking the peak

Jeremy Sullivan, an investment advisor with Hamilton Hindin Greene, said markets are digesting whether inflation has peaked.

“It’s steady as she goes while the key inflation data comes through. In New Zealand, wholesale interest rates have been falling in the past month, and I’d expect one further hike by the Reserve Bank and then it’s all downhill from there,” he said.

“That’s what the market is pricing in – there will be a softening in inflation by the end of the year and interest rates will fall relatively steeply. And there’s serious value to be seen on the market, with the retirement and property sectors thinking they would never see lower rates again.”

Sullivan said property trusts are trading at a 30% discount or more to net tangible assets. With higher rents and falling interest rates in a year, their asset values can only increase.

Ebos Group, up 80c or 1.78% to $45.80, and Mainfreight, gaining 54c to $70.99, led the market higher. Vector increased 11c or 2.78% to $4.06.

Restaurant Brands, a volatile stock, increased 25c or 3.82% to $6.80; Chorus added 6c to $8.61; SkyCity improved 5c or 2.08% to $2.45; Infratil gained 7c to $9.42; and Vital Healthcare Property Trust was up 4c to $2.33.

In the retirement village sector, Ryman Healthcare was up 6c to $5.39; Arvida Group increased 2c or 2.02% to $1.01; and Summerset Group was down 10c to $8.40.

Other gainers were Heartland Group up 3c or 1.91% to $1.60; Pacific Edge adding 1.5c or 3.45% to 45c; and Eroad improving 3c or 5.17% to 61c.

Napier Port shed 10c or 3.85% to $2.50; Freightways was down 17c or 1.81% to $9.21; a2 Milk declined 7c to $6.17; Auckland International Airport decreased 8c to $8.60; and Genesis Energy was down 6.5c or 2.34% to $2.71.

Other decliners were Michael Hill down 3c or 2.75% to $1.06; Gentrack falling 12c or 3.69% to $3.13; Rakon shedding 2c or 2.3% to 85c; Steel & Tube decreasing 2c or 1.82% to $1.08; and NZ Oil & Gas down 2c or 5.26% to 36c.

Carbon Fund continued a strong recovery, up 6c or 3.16% to $1.96. Marlin Global Fund gained 2c or 2.38% to 86c; Smartpay increased 4.5c or 3.56% to $1.31; Green Cross Health added 3c or 2.19% to $1.40; and CDL Investments was up 3c or 4% to 78c.

Channel Infrastructure, down 1c to $1.52, told the market that 55m litres of private storage is now available at Marsden Point and the decommissioning of the refinery will be completed during the second quarter, with conversion costs on track and $145m having been spent.

Fuel throughput was 810m litres in the first quarter ending March compared with 800m litres in the previous quarter, and aviation supply continues to recover.

Medicinal cannabis company Cannasouth gained 1c or 3.45% to 30c after announcing the shareholder meeting to approve the merger with Katikati-based Eqalis will be held on April 28. Cannasouth is planning to raise $9m in new capital.

Chatham Rock Phosphate, down 1c or 4.76% to 20c, is proceeding with a $4.62m capital raise through a private placement of up to 30m units at 15.4c a unit.

Tags: Market Close

« NZ investors quiet as investors await US inflation dataSharemarket closes down on very low volumes »

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