“What we are seeing is that goods price inflation has peaked with transportation costs starting to decline, but the real problem is that costs have spilled over into services and the labour markets, particularly wage inflation.
“A key focus for financial markets is how the Government will relieve pressure on the cost of living in its Budget,” Goodson said. “It will likely be inflationary and make the Reserve Bank’s job harder, forcing interest rates even higher.
“It’s a difficult situation for the market. There are no free lunches here,” he said.
The Reserve Bank is expected to increase the OCR 25 basis points to 5.5 per cent when it delivers its latest monetary policy statement next Wednesday.
There was little movement among the leading stocks. Fisher & Paykel Healthcare was up 17c to $26.87; Fletcher Building gained 6c to $4.91; and South Port NZ gained 21c or 2.73 per cent to $7.90.
The retirement sector was stronger. Summerset Group gained 8c to $8.26; Arvida Group increased 3c or 2.83 per cent to $1.09; and Oceania Healthcare was also up 3c or 4.41 per cent to 71c.
Goodson said there was some buying support for the retirement stocks and “I think some investors are trying to sniff out the bottom of the housing market. The retirement village companies are highly leveraged to the housing market.”
Other gainers were Ventia Services up 7c or 2.41 per cent to $2.97; Steel & Tube increasing 2c or 1.85 per cent to $1.10; Trade Window improving 1c or 2.7 per cent to 38c; Allied Farmers adding 3c or 4.17 per cent to 75c; and CDL Investments up 3c or 4 per cent to 78c.
Auckland International Airport, up 2.5c to $8.83, continues to operate at 80-81 per cent of pre-Covid levels with 1.51 million (1.87 million in 2019) passengers moving through the terminals in March and 1.42 million (1.76 million) in April.
Manawa Energy, which sold its Trustpower retail business to Mercury last May for $467m, was down 8c to $4.90 after reporting net profit of $444.36m, up 271 per cent, on revenue of $490.891m, down 59 per cent, for the year ending March. Manawa is paying a final dividend of 8.5c a share on June 16.
Total operating earnings (ebitdaf) were $140m, at the top end of the company’s guidance, and electricity generation was 1917 gigawatt hours, up 9 per cent on the previous year.
Manawa’s pipeline of wind and solar developments has increased more than 900 megawatts over the past 11 months. The company told the market it was on track to double its generation by 2030.
Among other energy stocks, Vector was up 4c to $4.02; Meridian was down 6c to $5.42; and Mercury declined 4c to $6.37.
Hallenstein Glasson was down another 43c or 6.9 per cent to $5.80; Mainfreight gave up 32c to $69.99; PGG Wrightson declined 8c or 1.82 per cent to $4.31; Scales Corp shed 7c or 2.05 per cent to $3.34; and T&G Global decreased 4c or 1.95 per cent to $2.01.
Rakon fell 7c or 6.67 per cent to 989c; Eroad shed 2c or 3.57 per cent to 54c; Savor decreased 1.5c or 4.05 per cent to 35.5c; and NZ Automotive Investments was down 2c or 7.69 per cent to 24c.
KMD Brands, down 1c to $1.09, has arranged a three and a half year NZ$310m revolving facility consisting of A$240m and NZ$54m. The multi-currency facility is linked to KMD’s environmental, social and governance objectives.
TruScreen Group, unchanged at 3.2c, told the market its optical electrical technology has been included in China’s cervical cancer screening guideline by the Chinese Society of Colposcopy and Cervical Pathology.
