Market close: Aussies keep cash rate on hold while NZ sharemarket fails to fire

The Reserve Bank of Australia today left its cash rate unchanged at 4.1 per cent.

The New Zealand sharemarket retreated more than half a per cent on light trading as the Reserve Bank of Australia kept its official cash rate unchanged for the second straight month.

The S&P/NZX 50 Index fell at the opening and never recovered, giving up two-thirds of its gain the day before and closing at 11,980.41 – down 75.74 points or 0.63 per cent after increasing 0.92 per cent on Monday.

There were 56 gainers and 77 decliners over the whole market, with 21.95 million shares worth $64.76 million changing hands.

The Australian Reserve Bank held its rate at 4.1 per cent (New Zealand’s is 5.5 per cent) and said inflation is declining but is still too high (at 6 per cent), household consumption growth is weak, and conditions in the labour market remain very tight, although they have eased a little.

“Returning inflation to the target of 2-3 per cent within a reasonable timeframe remains the priority. The outlook for household consumption is an ongoing source of uncertainty,” the Bank said.

“The decision to hold rates unchanged provides further time to assess the impact of the increase in interest rates to date and the economic outlook.

“Some further tightening of monetary policy may be required, but that will depend upon the data and the evolving assessment of risks.”

The S&P/ASX 200 Index surged on the Reserve Bank announcement, and was up 0.54 per cent to 7450.1 points at 6pm NZ time. The NZX index was unaffected.

David McConnochie, investment adviser with Forsyth Barr, said the local market had a directionless day, giving back nearly all that it got the day before.

Wall Street had another solid day’s trading. The Dow Jones Industrial Average was up 0.28 per cent to 35,559.53 points; S&P 500 gained 0.15 per cent to 4588.96; and Nasdaq Composite increased 0.21 per cent to 14,346.02.

The markets had a strong July, the Dow and S&P 500 increasing 3 per cent and Nasdaq 4 per cent, and signalling the fifth successive month of gains, the longest run in the two years.

Investor confidence has been driven by a robust earnings season and falling inflation, meaning the US Federal Reserve may be coming to the end of its monetary tightening and the economy may be heading for a soft landing.

The markets have been led by The Magnificent Seven of Alphabet (Google), Amazon, Apple, Meta, Microsoft, Nvidia and Tesla. But older, more conventional stocks Boeing was up 13 per cent in July, 3M 11 per cent and Bank of America increased 12 per cent.

At home, energy stocks Meridian and Mercury gave back gains, falling 13.5c or 2.39 per cent to $5.51 and 5c to $6.54 respectively.

Ebos Group declined 75c or 1.95 per cent to $37.80; Summerset Group was down 10c to $10.20; Infratil decreased 11c to $9.84; Hallenstein Glasson fell 15c or 2.34 per cent to $6.25; Tourism Holdings shed 6c to $3.48; and Channel Infrastructure was down 3c or 1.83 per cent to $1.61.

Argosy Property was down 1.5c to $1.205; Property for Industry decreased 6c or 2.42 per cent to $2.42; NZX declined 3c or 2.44 per cent to $1.20; and MHM Automation shed 3c or 3.53 per cent to 82c.

Seeka decreased 5c or 12.82 per cent to $2.70; NZ Oil & Gas declined 1.5c or 3.75 per cent to 38.5c; Private Land and Property Fund was down 3.5c or 2.55 per cent to $1.337; Smartpay Holdings shed 4c or 2.19 per cent to $1.79; and Steel & Tube gave up 5c or 3.88 per cent to $1.24.

Among the gainers, Freightways was up 14c to $8.70; Briscoe Group collected 9c or 1.95 per cent to $4.70; Marsden Maritime Holdings improved 12c or 2.49 per cent to $4.94; 2 Cheap Cars rose 7.5c or 17.65 per cent to 50c; and NZME rose 4c or 4.21 per cent to 99c.

Sanford chief executive Peter Reidie has resigned after two and a half years in the role, and board member Craig Ellison has taken over in the interim. Sanford’s share price was up 1c to $4.17.

Metro Performance Glass, down 0.003c to 18c, told shareholders at the annual meeting that net debt is expected to be $53m-$55m for the six months ending September and operating earnings (ebit) better than the previous corresponding period, though it didn’t give any numbers.

Metroglass said through the second half of the 2023 financial year, the New Zealand construction market started to soften, and this has continued into the current year. “It is clear that we are in a period of reduced activity.”

The amount of glass processed in the first quarter of the 2024 financial year was 24 per cent lower than the same period last year. New Zealand revenue was 9 per cent lower but improved pricing and mix meant group revenue was similar to last year. Gross profit improved 7 per cent.

Metroglass shareholders voted against Graham Stuart, a member of the five-strong board in 2019, being re-elected as a director 78.5 per cent to 21.5 per cent – a move that doesn’t happen too often.