New Zealand shares slumped and the kiwi sank to its lowest level in more than two years after a shockingly deep recession through the middle of the year added to uncertainty after the Federal Reserve dialled back its prospective rate cuts for 2025.
The S&P/NZX 50 index joined a global slump, falling 111.4 points, or 0.9%, to 12,754.15 as the slower pace of rate cuts in the US sunk in. New Zealand’s 1% economic contraction in the September quarter added to the downbeat tone, pushing the kiwi dollar even lower as it dropped to 56.31 US cents at 5pm in Auckland from 57.20 cents at 7am and 57.37 cents yesterday.
“The cumulative 2.1% fall in GDP (gross domestic product) over the June and September quarters were much more than had been thought – indeed, outside of covid, the steepest two-quarter downturn since 1991 – and tell us that past interest rate increases were biting harder into the economy than generally appreciated,” Westpac NZ chief economist Kelly Eckhold said in a note. “Our initial read of this data strongly suggests the RBNZ (Reserve Bank of New Zealand) will be even more confident that more interest rate cuts will be required after February 2025.”
Meanwhile, the kiwi dollar fell to 87.42 yen from 88.19 yen yesterday after the Bank of Japan kept its benchmark rate on hold, and dropped to 44.73 British pence from 45.21 pence yesterday ahead of the Bank of England’s policy review, which is expected to keep its base rate at 4.75%.
The weaker kiwi provided relief to some exporters, with cinema software company Vista Group International rising 1.1% to $7.68, a2 Milk up 1.6% at $6.43, Air New Zealand gaining 0.9 to 56.5 cents, and Sanford increasing 0.2% to $4.25.
That wasn’t universal with rubber goods maker Skellerup Holdings sinking 3.1% to $4.95, Fisher & Paykel Healthcare falling 0.4% to $37.70 and Fonterra Shareholders’ Fund units down 0.2% at $5.18.
Widespread decline
Fletcher Building led the local stock market lower, sliding 3.8% to $2.76, while Port of Tauranga declined 2.3% to $6.35, Vital Healthcare Property Trust declined 2.2% to $1.77, and Spark New Zealand dropped 2.1% to $2.81 on the day’s biggest volume of 6.2 million shares.
Genesis Energy posted the day’s biggest gain on the benchmark index, up 1.6% at $2.19. NZ Windfarms rose 3.9% to 13.3 cents. After trading closed, the minnow generator said it’s signed a fixed variable volume contract for difference with Genesis for all of the output at its newly acquired Hau Nui windfarm.
SkyCity Entertainment Group gained 1.4% to $1.42 and Oceania Health advanced 1.4% to 74 cents.
Sky Network Television rose 1.2% to $2.61 after Forsyth Barr analysts upgraded the stock to outperform from neutral, raising their target price 20 cents to $3.20.
NZX shares rose 0.7% to $1.46. Discount investment platform Sharesies today touted operating metrics showing a 19% increase in buy orders placed by its 700,000 retail investor base through 2024, with the buy-to-sell ratio at 1.17-to-1.
Comvita rose 2.5% to 81 cents after saying its banks revised its covenants for the December quarter, but that talks were still ongoing for future periods. It also warned of a steeper first-half loss as competition squeezes margins.
Napier Port climbed 4% to $2.60 after it said underlying earnings would more than double to as much as $59 million in the September 2025 year.
Reporting by Paul McBeth. Image from Curious News.