Market close: Falling Australian inflation provides good news for New Zealand stock market

PGG Wrightson increased 14c or 3.45 per cent to $4.20 after upgrading its full-year operating earnings (ebitda) guidance to $60 million, from $57m.

The New Zealand sharemarket perked up after news that Australian inflation is falling faster than most commentators expected.

The S&P/NZX 50 Index was trading at an intraday low of 11,930 points when it was announced that inflation across the Tasman was running at 6 per cent, the same as New Zealand’s, and down from 7 per cent in the previous quarter.

The index closed 20.86 points or 0.17 per cent ahead at 11,954.73 but investors are still hanging back. Trading volumes remain light with 21.34 million shares worth $73.97 million changing hands, and there were 76 gainers and 51 decliners over the whole market.

Economists in Australia expected an annual inflation rate of 6.2 per cent and were now saying their Reserve Bank will likely extend its interest rate pause next week.

The Australian consumer price index increased 0.8 per cent for the June quarter - its lowest rise since September 2021 and easing from 1.4 per cent in the previous three months.

The S&P/ASX 200 Index was up 0.75 per cent to 7395.1 points at 6pm NZ time.

Jeremy Sullivan, investment adviser with Hamilton Hindin Greene, said: “The Aussie market rallied and this sentiment flowed into New Zealand. But all eyes are on interest rate decisions from US Federal Reserve and European and Japanese central banks this week.

“For the trainspotters amongst us, the Dow Jones Industrial Average has had 12 successive days of rises and is just one day short of the record 13 set in 1987. It may be difficult to get past that because of the central bank meetings,” he said.

The Dow Jones had a small increase overnight, gaining 0.076 per cent to 35,438.07 points and has risen 7 per cent this year. The S&P 500 Index increased 0.28 per cent to 4567.46 and up 19 per cent for the year. The Nasdaq Composite resumed its climb, gaining 0.61 per cent to 14,144.56 and up 35 per cent so far this year.

At home, Carbon Fund surged 30c or 19.48 per cent to $1.84 after the Government adjusted the Emissions Trading Scheme auction settings, with floor prices rising from the present $33.06 to $60 in December and other increases after that.

The Government also decided that in December the price to trigger any release of carbon units from the cost containment reserve will be $173, up from the present $82.

Next year the reserve volume will decrease from 8 million units to 7.7 million and continue reducing in the following years. The volume of units on offer will reduce by 17.6 million units between 2023 and 2028.

Fund manager Salt Funds Management said the Government has accepted most of the Climate Change Commission recommendations from 2022 but has made earlier cuts to the volume of units available at auction, thereby smoothing out the steep rate of decline that would have otherwise been needed from 2026.

Rural services company PGG Wrightson increased 14c or 3.45 per cent to $4.20 after upgrading its full-year operating earnings (ebitda) guidance to $60m, from $57m.

PGG told the market that fourth-quarter trading exceeded expectations in the retail, livestock, and wool and water divisions, while real estate continued to operate in challenging market conditions.

Fonterra shareholders approved the return of $800m, or 50c a share, to them late next month following the $1 billion sale of the Chilean business Soprole to Gloria Foods. Fonterra Shareholders’ Fund’s share price was unchanged at $3.48.

Fisher and Paykel Healthcare gained 22c to $24.30; Freightways was up 10c to $8.74; Skellerup Holdings increased 7c to $4.49; Delegat Group collected 13c to $9.15; and Bremworth added 3c or 7.14 per cent to 45c.

In the retail sector, Briscoe Group rose 21c or 4.77 per cent to $4.61; Michael Hill added 2c or 2.04 per cent to $1; and Hallenstein Glasson was down 17c or 2.7 per cent to $6.13.

NZME rose 4c or 4.17 per cent to $1; Steel & Tube also increased 4c or 3.33 per cent to $1.24; and ArborGen gained 1.5c or 8.11 per cent to 20c.

Ryman Healthcare was down 6c to $6.82; a2 Milk declined 5c to $5.43; Restaurant Brands shed 20c or 3.08 per cent to $6.30; and Vulcan Steel retreated 12c to $8.38.

CDL Investments decreased 2c or 2.53 per cent to 77c; AFT Pharmaceuticals was down 8c or 2.19 per cent to $3.58; Eroad declined 3c or 2.08 per cent to $1.41; and Black Pearl Group shed 3c or 5 per cent to 57c.

SkyCity Entertainment, which announced a new governance structure, declined 2c to $2.24.

Vital Healthcare Property Trust, down 0.005c to $2.36, told the market it has settled the sale of one private hospital and two health centres in Australia, and the Southport Private Hospital will settle in early September. The sales are worth $155m. Vital Healthcare is buying 7460sq m of land adjoining Ormiston Hospital in Auckland for $13m.

Utility pole measurement provider ikeGPS fell 4c or 5.33 per cent to 71c after reporting an 18 per cent decline in first-quarter revenue to $5.6m compared with the previous corresponding period. Subscription revenue was up 36 per cent to $2.5m, and transaction revenue was down 45 per cent to $2.1m.