The Reserve Bank of New Zealand stuck to its script as it kept the official cash rate unchanged at 3.25%, while keeping the door open to further cuts in the face of an ailing economy.
The S&P/NZX 50 index followed Australia lower after US President Donald Trump’s latest tariff talk on copper weighed on the Lucky Country’s mining sector, with would-be gold miner Santana Minerals on the red side of the ledger in New Zealand.
Meanwhile, a2 Milk Co paced declines after Citi analysts downgraded the infant formula exporter after its strong rally earlier this year.
And medical device firm Veriphi crossed its minimum threshold in its crowdfunding equity raising on PledgeMe, securing $501,000 with two days left in the campaign.
Still going lower
The New Zealand dollar traded at 59.99 US cents at 5pm in Auckland from 60 cents at 7am and 60.18 cents yesterday and the two-year swap rate increased 2 basis points to 3.21% after the Reserve Bank kept the OCR at 3.25% as expected, while saying the monetary policy committee expects to lower the rate if medium-term inflation pressures ease in line with their predictions.
“We do not buy into the view that holding the OCR now will preclude the RBNZ from cutting again if needed,” ASB Bank senior economist Mark Smith said in a note. “The global scene remains of concern as does the sluggishness of household demand, with both expected to dampen medium-term inflationary pressures in NZ.”
ASB’s economists expect the Reserve Bank will cut the cash rate in August to 3%, where it will stay for the rest of the year.
The kiwi dollar traded at 91.78 Australian cents from 91.99 cents yesterday, when the Reserve Bank of Australia surprised markets by keeping its cash rate unchanged at 3.85%.
Meanwhile, New Zealand’s stock market followed the ASX lower, as Australian mining companies were knocked by US President Donald Trump’s plans to impose a 50% tariff on copper. Dual-listed would-be gold miner Sanatana Minerals fell 2.5% to 58 cents on the NZX.
The NZX50 dropped 90.41 points, or 0.7%, to 12,768.61, with 31 stocks declining, 12 gaining and seven companies unchanged. Turnover across the main board was $107.6 million.
Cool property
Interest-rate sensitive property stocks were broadly weaker in the wake of the RBNZ decision, with big box retail landlord Investore Property leading the benchmark index lower, falling 4.1% to $1.16. Stride Property Group declined 3.2% to $1.20 and Precinct Properties NZ slipped 2.4% to $1.23, while Fletcher Building – often linked to the strength of the economy – dropped 3.5% to $3.
Kiwi Property Group was the most heavily traded stock on a volume of 4.3 million shares, falling 0.5% to 95 cents, while Spark New Zealand rose 1.6% to $2.54 on a volume of 2.9 million and Auckland International Airport declined 0.8% to $7.47 on a volume of 2.5 million.
The a2 Milk Co hit a three-month low $7.98, ending the day down 4.1% at $8.04 after Citi analysts downgraded their rating on the company to ‘neutral’ from ‘buy’, saying softer port data and a profit warning by China Feihe made the infant formula exporter look overvalued.
SkyCity Entertainment Group posted the biggest gain on the NZX50, up 5.2% at $1.01, the highest it's traded at in more than a month.
The dual-listed banks were stronger, with Westpac Banking Corp up 3.1% at $36.90 and ANZ Group Holdings rising 0.6% to $32.88.
Outside the benchmark index, PGG Wrightson rose 4% to $2.09, snapping three days of declines.
And on the PledgeMe platform, medical device maker Veriphi hit its minimum $500,000 threshold through a crowdfunding equity raising, to help fund its push across the Tasman and secure a second customer.
Associate justice minister Nicole McKee outlined proposals to give law enforcement tougher powers to enforce anti-money laundering rules, giving them greater powers to get information from banks on persons of interest.
The regime will ban crypto ATMs and limit cash transfers to $5,000 for international funds transfer services. Other means to make larger payments will still be available, such as through electronic transfers via a bank account.
Reporting by Paul McBeth. Image from Kevin Grieve on Unsplash.
