Auckland International Airport cleared the S&P/NZX 50 index for take-off as the benchmark hit a five-month high with the country’s main gateway casting off the prospect of a harsher regulatory gaze.
Statistics New Zealand’s monthly partial inflation reading showed food prices might give the Reserve Bank some cause for caution in cutting the official cash rate.
Meanwhile, a weaker jobs market across the Tasman has economists pencilling in a rate cut by the Reserve Bank of Australia when it reviews policy next month.
And retailers including Briscoe Group, KMD Brands and Michael Hill International were stronger after the Commerce Commission decided not to regulate credit card surcharge fees, instead setting a lower cap on the interchange fees charged by Visa and Mastercard.
Ready for take-off
The NZX50 jumped 150.82 points, or 1.2%, to 12,905.41, its highest level since February. Twenty-eight stocks gained on the benchmark index, 12 declined and 10 were unchanged. Turnover picked up across the main board, at $124.1 million.
Auckland airport drove gains on the NZX50, climbing 4.4% to $7.78 on a volume of 1.4 million after the country’s major gateway said the Ministry of Business, Innovation and Employment isn’t considering legislative change in the recent review of airport regulation.
Air New Zealand, a regular critic of the airport’s landing fees, increased 0.9% to 59.5 cents.
The kiwi dollar fell to 59.28 US cents at 5pm in Auckland from 59.50 cents yesterday after Stats NZ figures showed food prices rose 4.6% in June from a year earlier, with the partial inflation reading seen pushing the consumers price index outside the 3% top end of the Reserve Bank’s target band.
Not straightforward
ASB Bank senior economist Mark Smith said there were good reasons for inflation to move lower by the end of the year and into 2026, but risks remained that the prices pressure could be more persistent.
“As such, the RBNZ will be somewhat wary. Readings for core CPI inflation and inflation expectations will be pivotal,” Smith said in a note. “We expect a further 25 basis point OCR (official cash rate) cut in August but acknowledge that weak activity data and the downward skew to global risks could see a sub-3% OCR emerge by year end.”
Exporters were generally stronger with the weaker currency, which boosts the value of income derived overseas. The a2 Milk Co led the NZX50 higher, rising 4.8% to $8.28, while Fisher & Paykel Healthcare gained 2.1% to $36.75 and Skellerup Holdings advanced 1% to $4.85.
Vista Group International posted the biggest decline on the benchmark index, falling 3% to $3.58, while Spark New Zealand was the most heavily traded stock with a volume of 2.5 million as it slipped 2.7% to $2.575.
Meridian Energy decreased 0.2% to $5.76 after Standard & Poor’s affirmed its BBB+ credit rating.
Light touch
Retailers were broadly stronger after the Commerce Commission decided against regulating interchange fees for commercial credit cards, instead setting lower caps on the fees, which are often passed on to customers.
KMD Brands rose 2% to 26 cents, Briscoe Group increased 0.8% to $6.05 and Michael Hill International advanced 2.4% to 43 cents. Warehouse Group was unchanged at 82 cents and Hallenstein Glasson Holdings was unchanged at $8.51.
Outside the benchmark index, Pacific Edge slipped 0.9% to 10.5 cents after opening the $5 million share purchase plan component of its capital raising, having secured $16.1 million in a placement to institutions including ANZ New Zealand Investments, Harbour Asset Management and Masfen Securities.
The kiwi dollar rose to 91.33 Australian cents from 91.17 cents yesterday after Bureau of Statistics figures across the Tasman showed an unexpected increase in Australia’s unemployment rate to 4.9%, firming up predictions for the Reserve Bank of Australia to cut its target cash rate next month. The S&P/ASX 200 index was up 0.7% in late trading.
Ryan Wells, an economist at Westpac, said it would take a few months of data before being able to say whether the turn in the labour market was the start of a new trend of gradual softening.
“The RBA are likely to adopt this view as well, though at the margin, the data strengthens the already-strong case to deliver the next rate cut in August,” he said in a note.
Reporting by Paul McBeth. Image from Curious News.
