NZ stocks stage strong turnaround on back of inflation figures - Market close

Contact rose 7c to $8.16.

The New Zealand sharemarket staged a strong turnaround after the latest consumers price index saw annual inflation fall below 5 per cent for the first time in 27 months.

The S&P/NZX 50 Index had fallen to 11,733.23 before the Stats NZ announcement but then climbed steadily to close at 11,856.61, gaining 53.73 points or 0.46 per cent.

There were 72 gainers and 53 decliners over the whole market on volumes of 27.75 million share transactions worth $85.12 million.

The December consumers price index (CPI) increased 0.5 per cent, representing annual inflation of 4.7 per cent and down from 5.6 per cent in the September quarter. Inflation was at 4.9 per cent in September 2021 and was last in the Reserve Bank target of 1-3 per cent in March 2021 at 1.5 per cent.

The December quarterly rise was influenced by higher prices for housing and household utilities and offset by lower prices for food.

The latest inflation rate was below the Reserve Bank’s forecast of 5 per cent. Australia has inflation of 4.3 per cent, UK 4 per cent and United States 3.4 per cent.

Greg Smith, head of retail with Devon Funds Management, said the headline inflation was in line with market expectations. “Imported tradables inflation is lower at 3 per cent but non-tradables or domestic inflation remains sticky at 5.9 per cent.

“The Reserve Bank has been overtly cautious throughout and I don’t think the numbers will change the rhetoric. They might, however, steer the bank away from having one more official cash rate rise this year. Still, the market consensus is a rate cut in the second half of the year,” Smith said. The Reserve Bank next meets on February 28.

Fisher and Paykel Healthcare was up 20c to $23.95; Summerset Group gained 24c or 2.27 per cent to $10.79; Ebos Group collected 30c to $36.65; Oceania Healthcare increased 3c or 4.29 per cent to 73c; and Meridian added 5c to $5.65.

Contact, up 7c to $8.16, reported steady mass market electricity and gas sales of 279GWh for December compared with 283GWh for the same month in 2022. Contracted wholesale electricity sales were 692GWh (568GWh in December 2022). South Island controlled storage was 77 per cent of mean at January 16 and North Island 130 per cent.

Mercury, declining 6c to $6.49, said increased wind generation of 579GWh in the three months ending December offset lower hydro volume of 928GWh, down 28 per cent on the previous corresponding period. However, strong hydro inflows into January provides healthy storage for the third quarter, and Mercury is forecasting full-year hydro generation of 4000GWh.

Auckland International Airport, unchanged at $8.58, reported a 15 per cent increase in passenger volumes last month to 1.71 million, now 86 per cent of the pre-Covid level. International passengers rose 26 per cent compared with December 2022. In November, passenger volumes increased 18 per cent to 1.58 million, 87 per cent of pre-Covid, and international was up 31 per cent.

Interest rate-sensitive property stocks made some ground. Stride rose 5c or 3.79 per cent to $1.37; Investore added 2c or 1.79 per cent to $1.14; Kiwi Property was also up 2c or 2.38 per cent to 86c; and Argosy gained 2c to $1.55.

Other gainers were Rakon increasing 6c or 4.96 per cent to $1.27; Scales Corp collecting 11c or 3.41 per cent to $3.34; Vulcan Steel gaining 16c or 2.04 per cent to $8; Restaurant Brands up 10c or 2.56 per cent to $4; Colonial Motor Company improving 13c to $8.62; and Carbon Fund rising 6c or 3.41 per cent to $1.82.

NZME fell 5c or 4.85 per cent to 98c; Michael Hill declined 4c or 4.17 per cent to 92c; Scott Technology shed 9c or 2.77 per cent to $3.16; Burger Fuel decreased 1.5c or 5.08 per cent to 28c; Eroad was down 3c or 3.23 per cent to 90c; and Winton Land gave up a further 5c or 1.92 per cent to $2.55.

Cannasouth increased 2.3c or 21.9 per cent to 12.8c after reporting revenue increases of $26,000 in October, $201,000 in November and $243,000 last month. It started selling medicinal cannabis products in November.

Livestock Improvement Corporation increased 5c or 5 per cent to $1.05 after reporting steady revenue of $171.95m for the six months ending November and a 13 per cent fall in net profit to $28.98m. LIC is paying a special dividend of 13c a share on February 23 following the sale of its shares in National Milk Records.