Market close: Higher for longer interest rate call puts dampener on sharemarket

Fisher and Paykel Healthcare produced a pleasing half-year financial result.

The Reserve Bank put a big dampener on the New Zealand sharemarket with its higher for longer interest rates approach after Fisher and Paykel Healthcare lifted spirits with a pleasing half-year financial result.

The S&P/NZX 50 Index surged more than 1.2 per cent to an intraday high of 11,409.2 points during lunchtime at the peak of market heavyweight Fisher and Paykel’s trading.

But the index came back to earth and finished flat at 11,235.94, down 1.43 points or 0.01 per cent following the Reserve Bank’s latest monetary policy statement.

There were 96 decliners and just 34 gainers on the main board with 34.86 million shares worth $180.06 million changing hands.

The Reserve Bank left the official cash rate unchanged at 5.5 per cent but in a surprise to the market increased the forecast peak to 5.69 per cent.

The bank said there wouldn’t be any rate cuts until mid-2025 – longer than the expected May next year. Inflation (at 5.6 per cent) remained too high and monetary policy would remain restrictive.

The NZ dollar strengthened more than half a cent against the American greenback to US61.9c, from US61.29c.

Across the Tasman, the October consumer price index showed inflation in Australia has fallen to 4.9 per cent, from 5.6 per cent in the year to September.

Greg Smith, head of retail with Devon Funds Management, said the Reserve Bank delivered “a hawkish hold, and that’s not vastly different to other central banks. I guess the bank didn’t want to signal any cuts, reheat the economy and undo all the work to get inflation down.”

Fisher and Paykel Healthcare rose $1.31 or 5.82 per cent to $23.80 after reaching an intraday high of $25.12, and surged past Meridian Energy ($13.26 billion) as the biggest local stock on market capitalisation, with $13.85b.

The healthcare company reported a 16 per cent increase in revenue to $803.7m and a 12 per cent rise in net profit to $107.3m for the six months ending September – numbers that surprised the market. The company had earlier indicated revenue of $790m and profit of $95m-$105m.

Fisher and Paykel is now expecting full-year revenue of $1.7 billion (last year $1.58b) and net profit of $250m.260m (last year $250.3m). Fisher and Paykel is paying an increased interim dividend of 18c a share on December 18.

Leading retirement village stock Ryman Healthcare was down 8c at $5.22 after reporting a 17.8 per cent increase in revenue to $322.96m and 3.8 per cent decline in net profit to $186.68m for the six months ending September. It is not paying an interim dividend.

Ryman told the market it is in a reset phase with building development matching sales activity, and has stopped work or is selling the land on five sites. There were 699 sales, down 9.5 per cent on the same period last year.

Ebos Group was up $1.36 or 3.82 per cent to $36.99 on trade worth $35.23m; Freightways collected 12c to $8.13; and Mainfreight gained $1.37 or 2.1 per cent to $66.72.

Meridian shed 16c or 3.02 per cent to $5.13; Mercury was down 13c or 2.09 per cent to $6.08; Sky TV declined 7c or 2.44 per cent to $2.80; Tourism Holdings decreased 9c or 2.54 per cent to $34.46; Arvida Group fell 5c or 4.72 per cent to $1.01; and Oceania Healthcare was down 21c or 2.78 per cent to 70c.

Leading banks ANZ and Westpac fell 85c or 3.31 per cent to $25.91 and 60c or 2.58 per cent to $22.65 respectively.

Eroad increased 6c or 7.59 per cent to 85c after delivering a 4 per cent increase in half-year revenue of $88.86m and a net loss of $1.2m. Eroad confirmed full-year revenue growth guidance of 6-9 per cent ($175m-$180m) and expects to have positive free cash flow in the latter part of next year.

Argosy Property, down 4c or 3.48 per cent to $1.11, reported half revenue of $58.43m, up 6.3 per cent, and a net loss of $19.8m, mainly due to a $50.8m reduction in the value of its portfolio. Argosy achieved 3.6 per cent rental growth and confirmed a full-year dividend guidance of 6.65c a share.

Gentrack, which is winning new contracts and expanding into Europe, Middle East, South East Asia and India (for engineering), climbed a further 15c or 2.65 per cent to $5.80.