Market close: NZ stocks surge on backdrop of falling US inflation

The October CPI in the United States was flat and inflation is running at 3.2 per cent compared with 3.7 per cent for the year ending September. Photo / Getty Images

The New Zealand sharemarket surged more than one and a half per cent following a strong day on Wall St where there is renewed belief that inflation is being beaten down.

The S&P/NZX 50 Index powered up from the opening and closed at 11,352.84, rising 179.56 points or 1.61 per cent on broad-based buying.

There were 101 gainers and 40 decliners over the whole market on increased volumes of 34.75 million share transactions worth $125.62 million.

Greg Smith, head of retail with Devon Funds Management, said the catalyst was the soft United States Consumer Price Index (CPI).

“Bond yields have also eased and there is a view that central banks including the US Federal Reserve are done and dusted with interest rate hikes and there will be a softer economic landing,” he said.

The October CPI was flat and inflation is running at 3.2 per cent compared with 3.7 per cent for the year ending September. It was the first decline in four months.

The US 10-year Treasury Note yield fell to a three-month low of 4.43 per cent after shocking shares investors when it went over 5 per cent in October. The NZ 10-Year Government Bond yield was down 16.2 basis points to 4.99 per cent.

The US dollar weakened and the Kiwi cross-rate climbed to US60.19c – its highest level in three months apart from a short blip on October 11/12.

Against the backdrop of falling inflation – New Zealand’s latest CPI is expected to be lower with food prices declining – stock prices rebounded sharply.

The Dow Jones Industrial Average was up 1.43 per cent to 34,827.7 points; S&P 500 increased 1.91 per cent to 4495.7, and the Nasdaq Composite rose 2.37 per cent to 14,094.38, up 9.6 per cent in November and on pace for its biggest one-month gain since January.

Across the Tasman, the S&P/ASX 200 Index had risen 1.39 per cent to 7104.3 points at 6pm NZ time.

The economically-sensitive freighting and interest rate-sensitive property stocks were in demand.

Mainfreight continued its rise, gaining $3.89 or 6.17 per cent to $66.90 and has increased more than $10 over the past fortnight.

Freightways was up 25c or 3.22 per cent to $8.02; Port of Tauranga rose 32c or 6.2 per cent to $5.48; Marsden Maritime Holdings added 15c or 3.33 per cent to $4.65; and Move Logistics collected 3c or 5.36 per cent to 59c.

All the property stocks made gains. Amongst them, Stride was up 3c or 2.27 per cent to $1.35; Property for Industry increased 5.5c or 2.52 per cent to $2.24; Precinct added 3.5c or 3.04 per cent to $1.185; Goodman Trust collected 6c or 2.86 per cent to $2.155; and Argosy was up 2c or 1.8 per cent to $1.13.

Contact increased 28c or 3.67 per cent to $7.90 after telling shareholders at the annual meeting that the Rio Tinto-owned NZ Aluminium Smelter continued to indicate a desire to maintain operations at Tiwai Point beyond 2024.

Other leading stocks Ebos gained 95c or 2.52 per cent to $38.60; Infratil was up 29.5c or 2.86 per cent to $10.60; and Spark picked up 7c to $5.14.

Publisher and broadcaster NZME increased 7c or 8.43 per cent to 90c after detailing digital growth in its investor presentation. Digital revenue is expected to be 29 per cent of total income this financial year – double the percentage since 2019.

Serko gained 1c to $4.55 on a solid half-year result after capitalising on the recovery in travel and its partnership with Booking.com. Serko’s revenue rose 87 per cent to $36.34m and its bottom-line loss settled at $7.16m, an improvement of 64 per cent.

Used car dealer 2 Cheap Cars rose 15c or 21.13 per cent to 86c after reporting that half-year revenue was up 4 per cent to $41.9m on higher prices, even though vehicle sales were down 12 per cent to 3776. Net profit increased $2.6m to $3.2m.

Pacific Edge was up 1c or 10 per cent to 11c after telling the market it has integrated Cxbladder tests within the electronic medical records of Kaiser Permanente, which has 12.6m members in the United States. The tests have gone live within 15 urology centres in Southern California.