Shane Solly, portfolio manager with Harbour Asset Management, said there’s no pull-back in non-tradeable domestic inflation (at 3.5%) with telecommunications equipment and housing stronger.
People are now talking about the RBNZ bringing forward interest rate rises from early 2027 to late this year, he said.
“Adding the geopolitical uncertainty to our sticky inflation, and we’ve certainly had a see-sawing week.”
ANZ, which forecast annual inflation at 3%, said the latest data will make for uncomfortable reading for the RBNZ, but indicators of spare capacity suggest there is still some, albeit diminishing, underlying disinflation in the pipeline that should help return headline inflation to within the 1-3% target band.
When combined with the recent sharp improvement in activity data, the latest inflation suggests hikes this year are likelier than not.
ANZ is now forecasting the first 25 basis-point hike in the official cash rate in December, with two follow-up increases in February and April 2027, taking the rate back to an assumed neutral level of 3%.
Bond yields have increased, affecting interest-rate-sensitive stocks on the local market.
The NZ 10 Year Government Bond yield rose to nearly 4.6%, the same level as late July last year and after falling under 4% in October. The 2-year Government Bond yield was up five basis points to 3.3%.
Local stocks
Property stocks were weaker, as was Infratil, down 29c or 2.61% to $10.81, and Spark, decreasing 3c to $2.24.Argosy declined 2.5c or 2.01% to $1.22; Precinct Properties shed 3c or 2.53% to $1.15; Kiwi Property was down 2c or 1.9% to $1.03; and Vital Healthcare Property Trust decreased 4c or 1.98% to $1.98.
Port of Tauranga was down 8c to $7.97; a2 Milk shed 28c or 2.82% to $9.66; Contact Energy decreased 10c to $9.25; Winton Land declined 8c or 3.85% to $2; and 2 Cheap Cars fell 3c or 4.38% to 65.5c.
South Port increased 49c or 5.63% to $9.20; Comvita rose 5c or 8.06% to 67c; Scales Corp gained 11c or 1.95% to $5.76; Steel & Tube was up 2.5c or 3.82% to 68c; and Blackpearl Group added 3c or 3.06% to $1.01.
Vector, unchanged at $4.90, reported a 1.3% increase in electricity volume distributed to 4543GWh for the six months ending December.
In the past year, total electricity connections grew 1.3% to 637,247, but new connections were down 1% for the six months ending December compared with the previous corresponding period.
Fonterra Co-operative is holding a special meeting on February 19 for shareholders to vote on a tax-free capital return of $2 a share, equivalent to $3.2 billion, following the sale of its global consumer business and brands such as Anchor and Mainland to French multinational Lactalis.
The $4.22b deal is expected to be completed by the end of March. Fonterra Shareholders’ Fund was up 1c to 8.19, and the co-operative share price was unchanged at $5.98.
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