Heartland Group Holdings sank to its lowest in almost five years, leading the benchmark index down as investors absorbed the first interest rate cut across the Tasman in more than four years.
The S&P/NZX 50 index declined 17.81 points, or 0.1%, to 13,051.12, on a busier day than usual, with a turnover of $237.2 million on the main board.
The local market fell alongside its Australian peer, with the S&P/ASX 200 index down 0.5% in late trading as the Reserve Bank of Australia cut its target cash rate a quarter-point to 4.1%, as expected.
The central bank’s board said it won’t cut too aggressively for fear of reviving inflation, having tamed it somewhat.
“The forecasts published today suggest that, if monetary policy is eased too much too soon, disinflation could stall, and inflation would settle above the midpoint of the target range,” the RBA board said in a statement. “In removing a little of the policy restrictiveness in its decision today, the board acknowledges that progress has been made but is cautious about the outlook.”
The kiwi dollar fell to 89.90 Australian cents at 5pm in Auckland from 90.12 cents yesterday. New Zealand’s Reserve Bank will review its monetary policy on Wednesday and is widely expected to cut the official cash rate half a percentage point to 3.75%.
The kiwi fell to 57.09 US cents at 5pm from 57.36 cents yesterday, and gained to 54.97 euro cents from 54.66 cents. US markets will reopen tonight having been closed for the Presidents’ Day holiday on Monday.
Heartland led the NZX50 lower as it sank almost 15% to 92 cents, its lowest level since April 2020. The financial services group said its New Zealand bank subsidiary booked a $49.6 million charge in the December period as it wrote off bad debts in its auto and business lending units, and increased provisioning for shaky loans.
Tight budgets
USX-listed non-bank lender Geneva Finance last week noted increased provisioning on bad debts, with the wider industry experiencing an increase in arrears as unemployment mounts.
ASX-listed job listings firm Seek today noted a 26% decline in New Zealand job ad volumes through the December half. Local white- and blue-collar recruitment firm Accordant Group fell 1.3% to 39.5 cents on the NZX.
Among companies tied to the domestic economy, retailer The Warehouse Group fell 3.9% to $1, media group NZME declined 0.9% to $1.07 and broadband provider Spark New Zealand slipped 1.7% to $2.93. Freightways gave up some of yesterday’s gains, falling 2.3% to $11.27.
Turners Automotive Group posted the biggest gain on the day, up 5% at a record $5.92 after raising its earnings guidance for the March year and on track to beat its $50 million profit target.
Meridian Energy fell 2% to $5.94 after securing consent for a windfarm in Wairarapa. Genesis Energy slipped 0.4% to $2.34 and Mercury NZ declined 2% to $5.94.
Contact Energy, which reported its first-half result yesterday, rose 2% to $9.33.
Infratil rose 1.9% to $11.18 on a volume of 3.8 million after the infrastructure investor lifted its holding in CDC Data Centres, paying A$216 million for another 1.6% stake to lift its share to 49.8%. The deal, which saw Australia’s Future Fund lift its stake to almost 35%, valued the data centre developer and operator at A$13.7 billion.
The a2 Milk Co extended its rally after Monday’s strong first-half result, gaining 3.3% to $8.12, with a raft of research houses raising their target price on the milk marketing firm. Supplier Synlait Milk also continued climb, rising 11% to $1.02, its highest level in more than a year.
Reporting by Paul McBeth. Image from Curious News.