Market close: Seven per cent inflation figure causes barely a stir at exchange

Inflation is up by 7 per cent - but the markets had expected it to be much higher. Photo /Sylvie Whinray

Annual inflation at nearly 7 per cent is high but it was lower than economists predicted and the New Zealand sharemarket responded by trading flat, with the NZ dollar falling.

The S&P/NZX 50 Index dipped when StatsNZ released the March quarter consumer price index numbers but the index soon recovered, closing at 11,954 – down 12.18 points or 0.1 per cent after reaching an intraday low of 11,916.71.

There were 72 gainers and 60 decliners over the whole market, on a volume of 125.2 million share transactions worth $137.34m. A total of 4.32m Air New Zealand rights worth $3.67m changed hands as the trading period closes soon.

Consumer prices, mainly food, transport, housing and construction, rose 1.8 per cent in the March quarter with annual inflation running at 6.9 per cent, up from 5.9 per cent in the previous quarter.

Economists had forecast up to 7.4 per cent, but the figure was in line with the Reserve Bank's view that inflation was likely to peak around 7 per cent in the first half of the year.

The NZ dollar fell from a day's high of US68.13c to US67.89c against the American greenback.

Greg Smith, head of retail with Devon Funds Management, said the inflation number was a big one – the highest in 30 years – but there was relief that it came in lower than the market expected.

"It sent the currency lower and that's good for exporters," he said. "It also probably pared back super-sized interest rate rises and poured cold water on another 50 basis points rise in the official cash rate next month.

"Maybe there was a bit of comfort we won't see the rapid pace of monetary tightening that was feared."

Fisher and Paykel Healthcare retreated 40c to $22.60, while Ebos Group rose 88c or 2.11 per cent to $42.55.

Contact Energy increased 10c to $8.15 after forming a joint venture with Lightsource bp, which operates in 17 countries, to develop solar generation projects in New Zealand – creating up to 380,000 megawatt hours of clean, affordable electricity annual by 2026. This is enough to power 50,000 homes across the country.

Smith said the gentailers are moving towards increasing renewable generation to meet their decarbonisation goals. Solar and wind are never going to meet all the needs but it all helps.

Air New Zealand rights continue to be sought after, rising 5.1c or 8.66 per cent to 64c, well above the reference price of 49c. The rights trading closes on Tuesday and shareholders can exercise their rights until Sunday, May 1.

If some rights are not exercised or sold, then the allocation of new shares will be available for other investors to buy in the shortfall bookbuild.

Smith said the rights have been remarkably well supported with strong interest from retail investors. "The opening of the border was well timed for the capital raise and there is more optimism that we are returning to normality."

Retirement village operator Arvida increased 4c or 2.41 per cent to $1.70; Chorus was up 6c to $7.40; Vista Group rose 7c or 4.09 per cent to $1.78; Steel & Tube collected 6c or 4.11 per cent to $1.52; and Vulcan Steel was up 27c or 2.75 per cent to $10.10.

Synlait Milk increased 8c or 2.41 per cent to $3.40, while a2 Milk declined 3c to $5.12 and Fonterra Shareholders' Fund was down 11c or 3.31 per cent to $3.21.

Property company Stride gained 4c or 2.11 per cent to $1.94, and Investore increased 4c or 2.35 per cent to $1.74.

NZME was down a further 13c or 8.23 per cent to $1.45; having fallen from a high of $1.78 on April 6.

Delegat Group declined 20c to $13; Summerset Group Holdings was down 10c to $11.40; and Restaurant Brands decreased 24c or 1.81 per cent to $13.

Gentrack decreased 5c or 2.69 per cent to $1.81; NZ King Salmon Investments declined 2.5c or 5.05 per cent to 47c; NZ Automotive Investments fell 6c or 7.14 per cent to 78c; Millennium & Copthorne Hotels New Zealand shed 5c or 1.98 per cent to $2.48; and Michael Hill International was down 3c or 2.26 per cent to $1.30.

Merchant services provider Smartpay Holdings reported annual revenue was up 37 per cent at the end of the March quarter, with Australian transaction revenue increasing 65 per cent and customer acquisition reaching 9684. Smartpay's share price gained 0.005c to 72.5c.

In the United States, streaming service Netflix fell a further 35.12 per cent to US$226.19 (NZ$333.75) – its biggest fall since 2004 - after reporting subscriber loss in its last quarter. The stock has now fallen more than 60 per cent in two days.