The New Zealand dollar rose to a four-week high against its Australian counterpart as a cooling pace of inflation across the Tasman opened the door to earlier rate cuts by the Reserve Bank of Australia than previously thought.
The kiwi traded at 90.77 Australian cents at 5pm in Auckland from 90.54 cents yesterday after Bureau of Statistics figures showed the annual pace of inflation slowed to 2.4% in the December quarter, just below what economists were expecting.
The yield on Australia’s 10-year government bond dropped 6 basis points to 4.37%, falling below New Zealand’s equivalent at 4.48%, which was largely unchanged. The kiwi traded at 56.69 US cents at 5pm from 56.57 cents yesterday.
“The better-than-expected inflation data tilts the balance of probabilities back in February’s favour,” Westpac Group chief economist Luci Ellis said in a note. “While we do not regard recent exchange rate movements as particularly consequential for the RBA decision, the prospect of more volatility here and in financial markets more broadly could have been a reason to delay and wait for more information.”
The prospect of lower rates spurred on Australia’s S&P/ASX 200 index, which was already enjoying the tailwind of Wall Street’s recovery, up 0.8% in late afternoon trading with tech stocks including WiseTech and Xero leading the index.
New Zealand’s S&P/NZX 50 index was more muted, rising 45.89 points, or 0.4%, to 13,003.04 on turnover of $102.7 million across the main board.
Components maker Rakon clawed back some of Tuesday’s losses, rising 1.8% to 57 cents. The power companies were broadly stronger with Meridian Energy up 1.2% at $5.85, Mercury NZ rising 1.8% to $6.13 and Genesis Energy increasing 0.3% to $3.91.
Port of Tauranga led the benchmark index higher, up 1.9% at $6.46. Spark New Zealand gained 1.7% to $2.94.
Moving on up
Gentrack rose 0.2% to $12.43 after getting upgraded to outperform by Forsyth Barr, with its target price raised to $14.90 from $14.54.
Hotellier Millennium & Copthorne Hotels New Zealand rose 2.7% to $2.26, eclipsing the price offered by controlling shareholder City Developments Ltd in its takeover bid.
Meanwhile on the USX, the Cushing family’s H&G vehicle triggered mop-up provisions in its takeover of Rural Equities having declared its takeover unconditional last week.
Datacentre investor Infratil fell for a fourth day, down 1.5% at $11.03. The infrastructure investor’s US renewable energy subsidiary Longroad Energy is attracting attention as US President Donald Trump has sought to freeze all federal grants to review them, namechecking the green new deal among a handful of policies now out of favour.
Pacific Edge, which is trying to retain Medicare coverage for its Cxbladder product, rose 3.2%, or 0.2 of a cent, to 6.4 cents
Nasdaq-listed Rocket Lab, which last year secured a grant from the US commerce department, fell 1.53% to US$28.98 overnight.
Sky Network Television fell for a second day as the reliability of its satellite service came under more media scrutiny. The pay-TV operator is migrating to a new satellite and is working out the cost of the move. The shares declined 4.8% to $2.80, posting the biggest decline on the day.
Minnow would-be miner New Talisman Gold Mines was the most heavily traded stock with a volume of 3.9 million shares. It rose 1.3 cents, or 39%, to 4.6 cents after saying it’s received a revised works access permit from the Hauraki District Council which will improve safety and reduce cost.
SkyCity Entertainment Group rose 0.7% to $1.42 on a volume of 1.6 million. Across the Tasman, struggling casino operator Star Entertainment is selling several assets including its Star Sydney Event Centre to Foundation Theatres for A$60 million.
Ebos Group rose 0.5% to $38.20 and Green Cross Health sank declined 2. 6% to 75 cents after Australia’s Sigma Healthcare shareholders approved the proposed merger with Chemist Warehouse.
Reporting by Paul McBeth. Image from David Clode on Unsplash.
