Market close: NZ stocks rise on renewed inflation hope

Energy stocks Meridian, Mercury, Genesis and Manawa all rose. Photo / NZME

The New Zealand sharemarket neared its highest level in 10 months with a half per cent gain on renewed hope that inflation has peaked and will continue to fall, thus avoiding a possible recession.

The rejuvenated S&P/NZX 50 Index climbed steadily all day and closed at 11,994.51, up 61.58 points or 0.52 per cent, following the release of the latest steady-as-it-goes consumers price index.

During the session the index broke through the 12,000 points level with an afternoon high of 12,008.69. The previous time the index traded above 12,000 points was on April 8 last year when it closed at 12,066.27.

There were 71 gainers and 55 decliners over the whole market with 40.86 million shares worth $137.7 million changing hands.

The December CPI increased 1.4 per cent, producing annual inflation of 7.2 per cent, the same as the September quarter and below the Reserve Bank’s forecast of 7.5 per cent.

ANZ Research now expects the bank to hike the OCR by 50 basis points next month and then two 25 basis points increases to a peak of 5.25 per cent.

ANZ said the inflation numbers clearly weren’t as bad as the Reserve Bank feared in November, and signs that inflation will ease meaningfully during this year are becoming increasingly clear.

Mark Lister, head of private wealth research with Craigs Investment Partners, said inflation was still high but there are early signs that it is turning and heading lower.

“The economy might have a chance of avoiding a recession and that’s good for corporate and the sharemarket. I think the peak of inflation is behind us and hopefully the Reserve Bank won’t need to push the OCR as high as it has forecast.

“I wouldn’t be surprised if the bank paused at a lower level than 5.5 per cent,” Lister said.

Australia’s inflation rate has hit 7.8 per cent after the December CPI increased 1.9 per cent, driven by surging electricity prices and the cost of holiday travel and accommodation.

The inflation rate was higher than the 7.3 per cent in September but below the Australian Reserve Bank’s forecast of 8 per cent. There was optimism across the Tasman that inflation there had also peaked.

The S&P/ASX 200 Index was down 0.15 per cent to 7479.3 points at 6pm NZ time. The NZ dollar reached an intraday high of US65.09c against the American greenback but slipped back to US64.89. The Kiwi was at A91c against the Australian dollar.

At home, Ryman Healthcare gained another 26c or 4.26 per cent to $6.36 and has risen 10 per cent in two trading days. Fellow retirement stock Oceania Healthcare gained 2c or 2.41 per cent to 85c.

Ebos Group had another good day, up 57c to $45.60. Leading banks ANZ increased 48c or 1.8 per cent to $27.08, and Westpac gained 39c to $25.88.

The property sector strengthened. Goodman Trust was up 5c or 2.43 per cent to $2.11; Kiwi gained 4c or 4.32 per cent to 96.5c; and Precinct Properties increased 2c to $1.27.

In the energy sector Meridian increased 8c to $5.35; Mercury added 8c to $5.93; Genesis was up 3c to $2.86; and Manawa collected 4c to $5.22.

Port of Tauranga gained 7c to $6.33; Move Logistics was up 3c or 2.86 per cent to $1.08; Smartpay Holdings increased 2.5c or 1.85 per cent to $1.38; and Kingfish fund rose 4c or 2.84 per cent to $1.45.

Chorus, up 1.5c to $8.385, told the market the ultra-fast broadband roll-out was completed last month and total fibre connections increased by 17,000 to 997,000 in the second quarter. Chorus’ target of one million fibre connections was achieved in mid-January.

Restaurant Brands was down 1c to $6.19 after reporting a 16.9 per cent increase in total sales to $332m for the fourth quarter ending December. Full-year sales reached $1.24 billion, up 16 per cent on the previous year, and supported by 17 new stores.

New Zealand annual sales were up 14.8 per cent to $529.2m; Australia increased 12.6 per cent to $283.4m; Hawaii was up 6.9 per cent to $247.5m; and California gained 2.7 per cent to $179m. Restaurant Brands now has 376 KFC, Taco Bell, Pizza Hut and Carl’s Jr stores.

Other decliners were Synlait Milk falling 7c or 1.99 per cent to $3.45; a2 Milk down 7c to $7.26; and Fonterra Shareholders’ Fund giving up 6c or 1.79 per cent to $3.29.

Michael Hill International fell 6c or 4.92 per cent to $1.16; Pacific Edge decreased 1.5c or 3.06 per cent to 47.5c; Sky TV shed 4c to 2.35; and Marlin Global fund was down 2c or 2.15 per cent to 91c.

Livestock Improvement Corp, unchanged at $1.25, reported a 6.4 per cent decrease in net profit to $33.3m on revenue of $177.2m, up 4.63 per cent, for the six months ending November. LIC has tightened its full-year earnings guidance to $21.5m-$25.5m, from $20m-$26m.