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RBNZ rate call gives NZ stocks a boost

The Reserve Bank of New Zealand’s decision to keep its official cash rate on hold while also signalling a slightly lower interest rate track gave NZ stocks a boost at the end of what has been a disappointing reporting season.

Wednesday, February 28th 2024, 6:25PM

by BusinessDesk

The S&P/NZX50 index ended at 11,763.32, up 68.71 points or 0.59%. There were 96 gainers and 42 decliners on volume of 43.5 million shares worth $135.6m.

The Reserve Bank of NZ (RBNZ) kept the official cash rate (OCR) at 5.5%, as expected, but it softened its stance slightly, with new forecasts suggesting the rate may have peaked.

The RBNZ said core inflation and most measures of inflation expectations have declined, and the risks to the inflation outlook have become more balanced.

“However, headline inflation remains above the 1 to 3% target band, limiting the (monetary policy) committee’s ability to tolerate upside inflation surprises.”

Jeremy Sullivan, investment adviser at Hamilton Hindin Greene, said the market had received a welcome boost from the central bank’s announcement and also took some confidence from lower-than-expected Australian inflation data, which showed a CPI gain of 3.4% in the January year.

The NZ dollar and local interest rates fell on the back of the RBNZ’s release.

“Whilst they are still saying higher for longer, there is now only a very remote chance of further rate hikes in New Zealand, and the likelihood of interest rate falls has increased modestly,” Sullivan said.

The market’s recently downtrodden stocks, Fletcher Building and Ryman Healthcare rebounded, gaining 10c to $4.05 and 15c to $4.60, respectively, which helped drive the top 50 share index higher.

The big mover on the day was cinema software company Vista, which gained 13c or 8.5% to $1.65 after reporting its annual result.

Vista said it had transformed Vista Group into a single business, Vista Cloud.

“With box office for 2023 up more than 30% on 2022, the confidence in the long-term success of the industry is one of the key factors driving the uptake of Vista Cloud, with recent signings looking to Vista Group to help accelerate their business performance with the best solutions in the industry,” the company said.

Vista was hit hard by the covid-19 pandemic when cinema showings in most countries stopped altogether.

“They are making good progress, but the industry overall is coming off a low base,” Sullivan said.

Debt-laden Synlait won a small reprieve, gaining 5c to 74c. The dairy processor earlier advised the market that it was creating a smaller executive leadership team “to increase alignment, reduce costs, and accelerate growth”.

In utilities, Spark and Meridian reported positive first-half results, and both appeared to have brighter outlooks for the rest of the year.

Spark’s adjusted net profit fell 4.8% to $157m for the first half, but adjusted Ebitdai was up, and the telco reaffirmed its full-year earnings and dividend guidance.

Meridian – the country’s biggest power generator – said its operating earnings, or earnings before interest, tax, depreciation, amortisation and financial instruments (Ebitdaf), came to $443m, up $18m or 4% over the half.

Spark shares gained 5c to finish at $5.13, while Meridan dropped 7c to $5.72.

Rural services group PGG Wrightson had another down day after issuing a savage earnings and dividend downgrade earlier in the week, the stock losing 27c or 9.3% to finish at $2.63.

Sullivan said it appeared investors were losing confidence in the company as it faces tougher times ahead.

Kiwifruit packhouse company Seeka gained 12c to $2.80 despite reporting an annual loss of $14.5m for the December year.

Tags: Market Close

« NZ stocks ease while speculation swirls around Fletcher BuildingNZ sharemarket 'lacklustre' as earning seasons closes out »

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AIA - Back My Build 6.19 - - -
AIA - Go Home Loans 8.74 7.24 ▼6.75 6.65
ANZ 8.64 7.84 7.39 7.25
ANZ Blueprint to Build 7.39 - - -
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ANZ Special - 7.24 6.79 6.65
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BNZ - Green Home Loan top-ups - - - 1.00
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CFML Loans 9.45 - - -
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China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 7.04 - -
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Co-operative Bank - Standard 8.40 7.74 7.29 7.15
Credit Union Auckland 7.70 - - -
First Credit Union Special - 7.45 7.35 -
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HSBC Premier LVR > 80% - - - -
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Kainga Ora - First Home Buyer Special - - - -
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Resimac - LVR < 90% 9.84 9.09 8.59 8.29
Resimac - Specialist Clear (Alt Doc) - - 8.99 -
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Westpac 8.64 7.89 7.35 7.25
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Median 8.64 7.29 7.32 6.65

Last updated: 8 April 2024 9:21am

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