New Zealand shares rose for a third day as equity investors shrugged off shakier government accounts, while glassmaker Metro Performance Glass surged on the prospect of a potential, if opportunistic, takeover.
The S&P/NZX 50 index rose 116.97 points, or 0.9%, to 12,726.30, joining Australia higher as the S&P/ASX 200 was buoyed by a rally in its major banks.
Investors weren’t deterred by the government’s half-year economic and fiscal update, which projected fiscal deficits for longer, even with a new operating measure, along with a bigger debt load and softer economic forecasts.
The weaker outlooked had been expected and economists didn’t see the latest accounts as derailing the Reserve Bank’s plans to keep cutting the official cash rate.
“We don’t think that the hyefu will deter the RBNZ from continuing to pare back monetary easing, including delivering a 50 basis point OCR cut in February 2025,” ASB senior economist Mark Smith said in a note.
“However, fiscal consolidation is imperative to rebuilding fiscal buffers and to provide the RBNZ with more leeway to further lower the OCR.”
The kiwi dollar was largely unchanged, trading at 57.73 US cents at 5pm in Auckland from 57.80 at 8am. Two-year swap rates fell 3 basis points to 3.58% and 10-year swaps slipped the same amount to 4.01%.
The Federal Reserve’s policy review this week is the major event for currency markets, with the US central bank expected to cut the fed funds rate by a quarter-point, while September quarter gross domestic product figures on Thursday are expected to show New Zealand’s economy shrank in that period.
KMD Brands led the benchmark index higher, rising 6.3% to 42 cents, while Mercury NZ snapped a five-day decline as it climbed 4.7% to $5.945.
Skellerup rose 4.6% to $5.23, while Auckland International Airport advanced 2.5% to $8.24 and Infratil increased 1.9% to $12.38.
Metro Performance Glass surged 25%, or 1.3 cents, to 6.6 cents after receiving a takeover bid at 8 cents per share from Crescent Capital Partners, one of the private equity firms that took it public in 2014.
The board said it doubts the offer is in the best interests of shareholders but are considering all their options before responding to the offer.
Investore Property posted the biggest decline on the benchmark index, falling 4.4% to $1.08, while Vital Healthcare Property Trust was down 2.7% at $1.79 and Serko slipped 2.6% to $3.69.
Reporting by Paul McBeth. Image from Curious News.
