NZX50 snaps five-day run as Reserve Bank’s rate review in focus

New Zealand’s S&P/NZX 50 index snapped a five-day rally, led lower by economic bellwether Freightways as investors turned their minds to the Reserve Bank’s policy review on Wednesday, which is expected to deliver at least a quarter-point cut to the benchmark rate

Stock market operator NZX declined on an unusually large volume, with e-waste recycler Mint Innovation confirming plans to list on the ASX without a secondary listing on this side of the Tasman.

Meanwhile, the prospect of lower interest rates spurred gains among property companies, with the likes of Stride Property Group, Vital Healthcare Property Trust and Investore Property among those on the green side of the ledger.

And the kiwi dollar jumped to a week-high against the yen as the ruling Liberal Democratic Party’s election of Sanae Takaichi fuelled expectations she’ll champion fiscal stimulus as Japan’s first female prime minister.

End of the line

The NZX50 fell 24.85 points, or 0.2%, to 13,489.24, with 25 stocks declining, 19 gaining and six unchanged. Turnover was $103.1 million, with Fisher & Paykel Healthcare accounting for $12.7 million of that as the medical device maker fell 0.3% to $37.65.

Stock markets across Asia were mixed, with Australia’s S&P/ASX 200 index down 0.1% in late trading and Hong Kong’s Hang Seng falling 0.6%, while Chinese markets were closed until Thursday for the Golden Week holiday.

Japan’s Nikkei 225 index surged 4.2% in late trading and the kiwi dollar jumped 87.57 yen at 5pm in Auckland from 85.91 yen last week after Sanae Takaichi was elected the ruling Liberal Democratic Party’s new leader, raising the prospect of new fiscal stimulus.

Freightways led the local benchmark lower, falling 2.6% to $13.59 and snapping its own five-day rally – having hit an all-time high $14.17 during Friday’s trading session – as investors turn their mind to the Reserve Bank’s upcoming policy review, which is broadly expected to see a 25 basis point cut to the official cash rate, taking it to 2.75%. Fletcher Building ended nine days on the green side of the ledger as it fell 0.3% to $3.47.

“The Reserve Bank’s the big focus this week, along with the GDT auction to see whether there’s a further decline in the milk price,” said Peter McIntyre, an investment adviser at Craigs Investment Partners. “The question is whether we’ve already baked in the 50 basis points of cuts that are coming, of which we’ll probably see 25 on Wednesday.”

The New Zealand Institute of Economic Research’s shadow board recommended a quarter-point cut, saying spare capacity in the economy provided scope for a small reduction without spurring inflation.

The kiwi dollar traded at 58.35 US cents at 5pm in Auckland from 58.33 cents at 7am and 58.19 cents last week.

Heavyweight stocks were a drag on the NZX50, with Meridian Energy falling 1.4% to $5.83 and Ebos Group declining 1.7% to $29.51.

Advance Australia fair

NZX was the most heavily traded stock on the benchmark index, with a volume of 2.6 million shares changing hands, of which 1.8 million traded in one transaction at $1.38 a share. The stock market operator ended the day down 2.5% at $1.385, after e-waste recycler Mint Innovation confirmed its intention to list on the ASX, with no plans for a secondary listing on this side of the Tasman.

Ryman Healthcare, which recently took up a secondary listing on the ASX, posted the biggest gain on the NZX50, rising $3.5% to $2.70, while outside the benchmark, Black Pearl Group – which will dual-list in November – advanced 2.2% to $1.145.

Property companies were broadly stronger ahead of the Reserve Bank’s Wednesday policy meeting. Stride Property Group rose 3.2% to $1.47, Vital Healthcare climbed 2.6% to $2.34 and Investore Property increased 2% to $1.29.

Auckland International Airport declined 0.3% to $7.89 after saying the Commerce Commission rejected calls for an inquiry into regulating airports, sticking with plans to review information disclosure requirements for major investment programmes.

Air New Zealand, which pushed for regulation, was unchanged at 60 cents.

SkyCity Entertainment Group slipped 0.7% to 71 cents after chief financial officer Peter Fredricson handed in his resignation, staying with the casino operator until March 1 to help with the handover. The company is starting a search for his replacement.

USX-listed Skyline Enterprises was unchanged at $22 after the High Court ordered the tourism operator’s Christchurch Casinos unit to pay a penalty of $5.1 million over anti-money laundering failures, confirming a settlement reached with the Department of Internal Affairs.

Reporting by Paul McBeth. Image from Curious News.