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A broad rally on the New Zealand market lifted the benchmark to a two-month high.
The sharemarket rose, tracking overseas markets higher, after a report showed US inflation cooled more than expected last month.
The benchmark S&P/NZX 50 Index gained 0.9%, or 105.164 points, to a two-month high of 12,013.43 on Thursday. On the broader market 89 stocks rose and 41 fell with $82 million shares traded.
Asian shares rose, boosted by Wall Street’s return to its highest level in more than a year. Japan’s benchmark Nikkei 225 rose 1.3% Australia’s S&P/ASX 200 added 1.4%, South Korea’s Kospi jumped nearly 1%, Hong Kong’s Hang Seng surged 2.3%, while the Shanghai Composite gained 0.8%.
Craigs Investment Partners investment adviser Peter McIntyre said there was a broad rally in the New Zealand market.
“The market was stronger on the back of that lower than anticipated CPI data in the States,” he said. “We’ve seen the US dollar drop, interest rates fall, and commodity prices rise, and we’ve had equity optimism on the back of that.”
On Wall Street, the S&P 500 rose 0.7% to 4472.16 to reach its strongest closing level since April 2022. The Dow Jones Industrial Average rose 0.3% to 34,347.43, and the Nasdaq composite gained 1.2% to 13,918.96.
US data showed consumer price inflation (CPI) rose 3% in June from a year earlier. That’s down from 4% inflation in May and was a touch lower than economists expected.
Traders remain nearly convinced the Fed will raise the federal funds rate at its meeting in two weeks to a range of 5.25% to 5.50%, which would be its highest level since 2001. But expectations are also climbing for that to be the final increase after rates started last year at virtually zero.
Reserve Bank of New Zealand
The path back to low inflation – Reserve Bank of New Zealand chief economist Paul Conway. (First published 23/03/23)
New Zealand’s Reserve Bank on Wednesday kept the official cash rate on hold for the first time in almost two years.
McIntyre said equity investors were buoyed by slowing inflation and more stability in interest rates.
Building supplies and construction company Fletcher Building rose 3.1% to $5.58, after earlier touching a 10-month high of $5.60.
“Fletchers has had a couple of strong days on the basis of lower interest rates from the Reserve Bank and maybe some stabilisation in the housing market as well,” McIntyre said.
Economists said the housing market was “closing in on a turning point” after the latest Real Estate Institute report showed the median house sale price across New Zealand has been unchanged at $780,000 for three months in a row.
Among other heavyweight stocks, Meridian Energy rose 0.9% to $5.55, Fisher & Paykel Healthcare increased 1.1% to $24.46, Auckland International Airport gained 0.8% to $8.40, and Spark lifted 0.6% to $5.04.
– With AP
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