The kiwi and Australian dollars dropped on growing expectations the Reserve Bank of Australia might cut the target cash rate in February.
The Australian central bank kept the cash rate at 4.35%, as expected, while dropping a reference to “not ruling anything in or out” in achieving its inflation goals, a shift seen as slightly increasing the odds of an early rate cut.
The kiwi dollar fell in tandem with its Australian counterpart, trading at 58.32 US cents at 5pm in Auckland down from 58.75 cents at 8am, as the antipodean pair gave up much of yesterday’s gains when China’s Politburo signalled more stimulus for the world’s second-biggest economy. The kiwi edged up against the Aussie, trading at 91.20 Australian cents from 91.01 cents this morning.
The S&P/NZX 50 index sank further after the announcement, ending the day at 12,723.37, down 78.43 points, or 0.6%. That was in contrast to Australia’s S&P/ASX 200 index, which pared its losses earlier in the day to be down 0.2% in afternoon trading.
The local benchmark index was led lower by Auckland Airport with another heavy day of trading as 3.6 million shares changed hands. The national gateway fell 3% to $8.09, just above the price Auckland Council got when it sold its 9.7% stake last week.
Infratil was also weaker, falling 3% to $12.05, trading near a two-month low, while Kiwi Property slipped 2.7% to 89 cents and Spark New Zealand declined 2.3% to $2.815, touching a fresh nine-year low.
Hallenstein Glasson posted the biggest gain on the day, up 6.5% at $7.49 after giving up an upbeat trading update at today’s annual meeting, where the New Zealand Shareholders’ Association mounted unsuccessful protest votes against long-serving directors Warren Bell and Graeme Popplewell.
The a2 Milk Co rallied after Chinese policymakers signalled more stimulus would be forthcoming in the new year, rising 1.9% to $6.35, and supplier Synlait Milk rose 6.3% to 42 cents. Among other exporters to gain were Rakon, up 5% at 63 cents, AFT Pharmaceuticals, up 3.6% at $2.85, T&G Global advanced 2.6% to $1.60 and Comvita increased 2.5% to 82 cents.
NZX gained 2.8% to $1.48 after the government left open the door to a future initial public offering for Kiwibank with its proposal to investigate a $500 million placement for the state-owned lender. Meanwhile, there’s speculation KiwiRail might spin out its Interislander ferry unit into a mixed-model ownership company.
Reporting by Paul McBeth. Image by Austin Distel on Unsplash.
