NZ sharemarket slips as investors brace for OCR hike despite lower inflation – Market close
The New Zealand sharemarket had a small fall as investors braced themselves for an interest rate hike next week despite lower inflation.
The S&P/NZX 50 Index dipped from a mid-morning high of 13,842.48 and closed at 13,746.84, down 14.45 points or 0.11% (there was a late rise), after the release of the September-quarter consumers price index, which increased 0.7%.
This meant annual inflation was running at 3.7%, down from 4.1% and below the forecast by the Reserve Bank of New Zealand (RBNZ) of 3.9%.
But there was concern that inflation will climb back over 4% by the end of the year because of the latest oil price rises and a weaker NZ dollar.
Greg Smith, investment specialist with Generate, said the market has priced in a 90% chance of a 25-basis-points increase in the Official Cash Rate (OCR) to 4% when the RBNZ meets next Wednesday.
“It’s a little curious. The headline inflation [at 3.7%] was below the RBNZ expectation, but core elements of the inflation are still relatively sticky.
“Tradable inflation (imports) was at 4.3% and non-tradable (domestic) was hotter than expected at 3.3%. A lot of the increases come back to petrol prices (Brent crude oil is trading at US$110.8/$194.78 a barrel),” Smith said.
“The oil price is not something the RBNZ can control. An OCR increase looks like a done deal but it should be a closer call than that. There is still spare capacity in the economy.
“If the RBNZ goes next week and at the end of the year, then it should be done with OCR hikes. Short-term pain for short-term gain,” Smith said.
ANZ said if the RBNZ doesn’t hike, the NZ dollar is likely to come under more downward pressure.
Lodestone shines
Solar farm developer Lodestone Energy finished a successful first day as a public listed company, up 3c to $2.28 from an intraday high of $2.35 – after raising $75 million in its initial public offer. It has a market capitalisation of $445.86m, just less than Oceania Healthcare.
Lodestone, founded in 2019, has five operating solar farms across New Zealand, and is targeting another 16-18 by the 2032 financial year.
In disclosures to the market, Gareth Morgan’s JIT Hillend Investment has 12.39% of Lodestone; Stephen Tindall’s K One W One 6.558%; and director Gary Holden’s Magnetite Energy 6.5%.
Market leader Fisher & Paykel Healthcare was down 55c to $48.88; Infratil decreased 12c to $12.27; Mainfreight shed $2 or 2.96% to $65.50; and Hallenstein Glasson declined 58c or 3.9% to $14.31.
F&P Healthcare told the market it contained a cyber incident involving unauthorised access to two employee email accounts and a subset of company files.
The company said there is no evidence the unlawful activity compromised the system that maintains patient data – with no evidence of ransomware or malware. There has been no impact to the company’s products, manufacturing operations or supply chain.
Fonterra Co-operative climbed a further 12c or 2.01% to a near seven-month high of $6.08; Gentrack rose 18c or 4.24% to $4.43; Scales Corp was up 21c or 3.36% to $6.46; Sanford added 19c or 3.17% to $6.19; and Turners Automotive gained 19c or 2.6% to $7.49.
Scott Technology increased 13c or 4.69% to $2.90 after reporting a 6.8% increase in revenue to $294.1m, a record, and 10.3% rise in net profit to $15.67m for the 12 months ending August. It is paying a final dividend of 5c a share on November 24.
Operating earnings (ebitda) were up 14% to $36.1m, also a record. Revenue from mining equipment (Rocklabs) rose 22% to $62.3m, and Scott expects full-year 2027 revenue of $310m-$340m and ebitda of $36m-$41m. It has $146m worth of forward work.
Jewellery retailer Michael Hill gained 2c or 4.88% to 43c after reporting a 6.6% increase in group sales (2.3% in Australian dollars) for the first 16 weeks of full-year 2027 – with Canada increasing 11.3%, Australia 4% and New Zealand 7.1%.
Michael Hill said it expects continued profitable growth through the year, with refreshed go-to-market campaigns, and gross margin was holding in line with the previous year.
Auckland International Airport, up 12c to $8.34, told shareholders at the annual meeting that trading for the first quarter was positive, and it confirmed full-year 2027 underlying profit guidance of $290m-$330m.
The airport company said it will be supporting close to six million international seats between November and March, with international airline capacity growing 5% compared with last summer.
Contact Energy was up 7c to $8.61 after launching a new $225m green capital bond offer. Contact would redeem the current bonds quoted on the NZX Debt Market on the reset date of Nov 19.
Transport and logistics software firm TradeWindow rose 1.7c or 13.08% to 14.7c after signing a 12-month agreement with dairy giant Lactalis to provide export documentation software for its Australian and New Zealand operations.
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