Power companies Meridian Energy, Mercury NZ and lines company Vector were among the firms driving the S&P/NZX 50 index higher, with stock markets broadly stronger across Asia as investors take heart from the looming phone call between presidents Donald Trump and Xi Jinping.
Meanwhile, Australia’s S&P/ASX 200 index hit a record as Commonwealth Bank of Australia scaled new heights, and as the countdown is on to welcome back Virgin Australia to the bourse.
Even so, Australia’s economy slowed sharply in the March quarter as firms dialled back their investments, adding to expectations the Reserve Bank of Australia will cut its cash rate next month.
And ASB Bank has changed its view on the pace of the Reserve Bank of New Zealand’s rate cutting cycle, picking reductions in August and October to give the central bank a bit more time to see how global uncertainties play out.
Widespread gains
The NZX50 jumped 167.48 points, or 1.4%, to 12,494.71, with 37 companies gaining, six declining, and seven unchanged. Turnover across the main board was $211.4 million, with Fisher & Paykel Healthcare accounting for $42.3 million of that as it rose 1.3% to $37.06.
Gains were broad on the local market, with power companies among the bigger drivers after yesterday’s news that the Tiwai Point smelter would turn on its fourth potline again with hydro storage levels healthy.
Mercury gained 4.2% to $5.90, Vector rose 4.2% to $4.20 and Meridian advanced 3.1% to $5.75.
Vulcan Steel led the benchmark index higher, up 6.4% at $7.31, with investors generally optimistic about the upcoming call between the US and Chinese presidents to revive trade negotiations between the world’s two biggest economies.
The White House is also expecting the raft of nations in trade talks to put their best bids forward on Wednesday.
That buoyed stock markets across Asia, with Australia’s ASX up 0.7% in late trading – with CBA hitting a new record – and Japan’s Nikkei 225 index advancing 0.9%. South Korea’s Kospi jumped 2.5% after Lee Jae-myung was elected president.
Growing pains
The kiwi dollar traded at 59.97 US cents at 5pm in Auckland from 60.14 cents yesterday, and was at 92.90 Australian cents from 93 cents.
Bureau of Statistics figures showed Australia’s economy grew 0.2% in the March quarter, less than economists were predicting as business investment across the Tasman remains weak.
The heightened geopolitical uncertainty has been a concern for the RBNZ, which cut the official cash rate a quarter-point to 3.25% last month, with a member of the monetary policy committee voting against a reduction.
ASB Bank economists have changed their view on the timing of future rate cuts, pushing out their expectations to reductions in August and October.
“Our reassessment is that it would take a significant deterioration in key US trade negotiations or other strong evidence that NZ inflation is rapidly cooling for the RBNZ to follow through with a July OCR cut,” ASB senior economist Mark Smith said in a note. “There is a lot of uncertainty at present, and the RBNZ will take it one meeting at a time.”
Learning to fly
Meanwhile, Australia’s initial public offering pipeline is showing signs of life with Virgin Australia looking to raise A$685 million at A$2.90 a share, with demand among fund managers said to exceed the size of the offer.
Both the NZX and ASX were stronger on the day on their respective bourses, with New Zealand’s stock market operator up 0.6% at $1.53, while Australia’s gained 0.4% to A$73.25. Meanwhile, Air New Zealand was unchanged at 59 cents and Qantas Airways fell 1.5% to A$10.71.
Warehouse Group posted the biggest decline on the NZX50, falling 4.1% to 94 cents, while Ebos Group declined 3.3% to $36.79.
Ryman Healthcare was the most heavily traded stock with a volume of 6.6 million, slipping 0.5% to $2.05. Of that, 3.2 million shares changed hands at $2.05.
Reporting by Paul McBeth. Image from Nick Sarvari on Unsplash.
