Australian sharemarket hits all-time high as inflation falls - Market close

At home, Fletcher Building was down 16c or 3.42 per cent to $4.52. Photo / NZME

Australian inflation fell more than expected and its sharemarket hit an all-time high. But the New Zealand bourse ignored all that action and declined nearly half a per cent.

After a mixed day on Wall Street, the S&P/NZX 50 Index fell sharply at the opening and never recovered, closing at 11,872.1 – down 42.3 points or 0.36 per cent. The intraday low was 11,832.81 points.

There were 55 gainers and 71 decliners over the whole market on volumes of 30.82 million share transactions worth $128.17 million. Auckland International Airport, down 1.5c to $8.435, was again heavily traded with $25.4m worth of its shares changing hands.

Australia’s inflation has fallen to a two-year low of 4.1 per cent as food and fuel prices increased at a slower pace. The market had expected annual inflation of 4.3 per cent. New Zealand’s is 4.7 per cent.

The consumer price index for the three months ending in December increased 0.6 per cent or half the pace of the September quarter, and economists had predicted 0.8 per cent.

Matt Goodson, managing director of Salt Funds Management, said the Australian inflation number should take a February interest rate hike off the table.

“As in other countries, goods inflation has fallen sharply but services inflation is still sticky,” Goodson said.

The softer-than-expected inflation rate turned the Australian market around. The S&P/ASX 200 Index had risen 1 per cent to 7675.9 points at 6pm NZT – and ahead of the previous record of 7628.9 points set on August 13, 2021.

At home, the January ANZ Business Outlook survey showed confidence increased 4 points to plus 37 and expected own activity declined 3 points to plus 26.

ANZ chief economist Sharon Zollner said the survey was a mixed bag. Inflation expectations were lower but they are still too high at 4.3 per cent. Cost and price expectations are holding up with a solid jump for the retail sector of firms expecting to raise their prices.

“The economy is at a delicate juncture,” Zollner said. “Growth is nothing flash (particularly per capita) and unemployment unfortunately rises above 5 per cent, but the economy overall continues to unwind its unsustainable Covid-era excesses without any major drama.

“Businesses also expect the worst is past. Although the medicine has been bitter, it’s working. We just need those pricing intentions to start playing ball to steer clear of another dose of monetary tightening.”

Zollner said the Reserve Bank has given fair warning that their patience is limited.

“There are definite signs of a stall in some of the leading inflation data, and the Reserve Bank may just decide they need to do more to be sure progress will continue, even at the risk of making a policy mistake.”

Fletcher Building was down 16c or 3.42 per cent to $4.52. The business outlook survey revealed that residential construction intentions had plunged to minus 3.7, from 28.6 in December.

Summerset declined 10c to $10.99; Infratil was down 14.5c to $10.565; Freightways shed 10c to $8.46; Delegat Group decreased 11c to $6.24; Green Cross Health gave up 3c or 2.44 to $1.20; and Seeka fell 10c or 3.64 per cent to $2.65.

In the energy sector, Mercury was up 11.5c to $6.75; Meridian was down 10c to $5.55; and Contact declined 9c to $8.07.

Oceania Healthcare was down 2c or 2.78 per cent to 70c; KMD Brands shed 2c or 2.82 per cent to 69c; ikeGPS declined 2c or 3.64 per cent to 53c; and Private Land and Property Fund fell 5.9c or 4.04 per cent to $1.40.

Mainfreight increased 60c to $71.70; Hallenstein Glasson recovered 10c or 1.85 per cent to $5.51; Gentrack gained 18c or 2.81 per cent to $6.58; Accordant Group improved 3c or 3.13 per cent to 99c; CDL Investments was up 2c or 2.56 per cent to 80c; and Channel Infrastructure added 3c or 2.08 per cent to $1.47.

Turners Automotive gained 6c to $4.60; Colonial Motor Company was up 21c or 2.39 per cent to $9; and Foley Wines rose 6c or 5.31 per cent to $1.19.

In yearly statistics provided by NZX (up 2c or 1.9 per cent to $1.07), total trades on the market fell 22.8 per cent to $8.96 billion and value traded was down 11.1 per cent to $31.23b. The average on-market trade size was $2,231, up 11.1 per cent.

The total market capitalisation at the end of December was $219.92b, up 1.6 per cent. Total capital raisings fell 32.1 per cent to $14.18b, and NZX has $11.53b funds under administration, up 15.8 per cent.