Exporters such as Fisher & Paykel Healthcare and The a2 Milk Co paced gains on the local stock market and the kiwi dollar gained about half a US cent on reports the incoming Donald Trump administration might take a more gradual approach to imposing tariffs.
The US dollar index – a measure of the greenback against a basket of currencies – softened and Chinese stock markets rallied after Bloomberg reported that members of Trump’s team are considering slower hikes in tariffs as a means to avoid an inflationary boost.
Global investors have grown increasingly worried that inflationary pulses may pause central banks from cutting interest rates as aggressively as they’d previously thought, which has pushed up bond yields around the world and supported the greenback.
The shift in tone about incoming US tariffs – the second time a softer approach has been raised in as many weeks – bolstered risk-sensitive currencies such as the kiwi, which rose to 56.07 US cents at 5pm in Auckland from 55.62 cents yesterday.
Exporters were also broadly stronger. F&P Healthcare rose 2% to $38.29, Sanford gained 1.9% to $4.40, a2 Milk advanced 1.8% to $6.16 and Scales Corp increased 1.2% to $4.13.
What goes down...
That came as the New Zealand Institute of Economic Research’s quarterly survey of business opinion showed a further improvement in business confidence, even if actual activity in the December quarter indicating a sluggish economy through the end of last year.
“The outlook has improved. But the here and now demands further rate relief from the RBNZ,” Kiwibank economists Mary Jo Vergara and Sabrina Delgado said in a note. “The lift in business confidence is underpinned by the expectation of more rate cuts. The RBNZ must deliver.”
The expect the Reserve Bank will cut the official cash rate half a percentage point to 3.75% at its February meeting.
NZME, whose advertising income is closely linked to the economy, gained 1.9% to $1.08 while materials firm Fletcher Building gained 1,8% to $2.85.
Meanwhile, the S&P/NZX 50 index snapped a three-day decline as it rose 46.50 points, or 0.4%, to 12,873.83 in a relatively quiet day of trading with a turnover of $86.5 million across the main board.
The Warehouse Group led the benchmark index higher, rising 3% to $1.03. Among other retailers, KMD Brands rose 1.2% to 44 cents.
Serko posted the biggest decline on the NZX50, falling 2.7% to $3.65, while Vista Group International slipped 1.6% to $3.11, following the soft lead from tech stocks on Wall Street overnight.
Reporting by Paul McBeth. Image from Curious News.