Matt Goodson, managing director of Salt Funds Management, said it was a quiet trading day, with the market dominated by macroeconomic news.
The Consumers Price Index (CPI) increased 0.9% for the March quarter, and annual inflation was unchanged at 3.1%. Most economists expected 2.9%, and the Reserve Bank of NZ (RBNZ) had forecast 3% inflation.
The NZIER March quarterly survey of business opinion (QSBO) revealed that only a net 1% of respondents expected better general economic conditions over the coming months, compared with a net 39% in the December quarter.
The building sector was the most downbeat.
Firms’ own trading activity was flat on a seasonally adjusted basis, a slight improvement from the net 3% reporting a decline in activity in their own business in the previous quarter.
Goodson said the headline inflation rate was slightly higher than expected, but the underlying inflation measures were relatively steady at mid- to low 2%.
“Some people are now calling for a hike in the official cash rate in July, but that’s just an obvious knee-jerk reaction to the 3.1% inflation rate. What would hiking achieve when the economy has spare capacity?”
Goodson said the QSBO survey was conducted throughout March and early April. The first batch of respondents, pre-Iran war, came in at plus 34% for business confidence, and post-Iran at minus 37%.
“The Iran oil crisis has spooked businesses big time. If a peace settlement is reached, that confidence will recover quite quickly, but not entirely. It will take some months for the oil market to untangle itself.”
In the QSBO survey, a net 12% of firms plan to cut back on investment in buildings over the coming year, while 9% plan to reduce investment in plant and machinery.
The Brent Crude oil price had fallen to US$94.43 (NZ$159.85) a barrel at 6pm NZ time.
Local stocks
At home, global transport and logistics company Mainfreight rose $2.10 or 3.68% to $59.20 after a two-week slide.
Fletcher Building was down 5c or 1.71% to $2.88; ANZ fell $1.44 or 3.1% to $45.02; SkyCity decreased 1.5c or 2.22% to 66c; Turners Automotive eased 11c to $8.54; and The Warehouse declined 2.5c or 3.23% to 75c.
In the energy sector, Meridian was down 6c to $5.59; Contact eased 9c to $9.30; and Mercury was up 3c to $6.48.
Summerset, down 16c or 1.96% to $7.99, told shareholders at the annual meeting that its building programme for the year would be at the bottom of its guidance of 750-850 new units.
Goodson said that, given the nature of the housing market and the rise in building costs, the guidance should not be a surprise; it was quite sensible. Summerset had tremendous leverage in its business model.
Ryman Healthcare increased 8c or 3.98% to $2.09; Port of Tauranga gained 9c to $8.08; Ventia Services added 18c or 2.89% to $6.40; and Hallenstein Glasson rose 23c or 2.35% to $10.
The property sector was stronger, with Property for Industry rising 5c or 2.21% to $2.31; Vital Healthcare Trust up 4c or 2.16% to $1.89; and Kiwi Property gaining 2c or 2.23% to 91.5c.
Data software firm Blackpearl Group was up 3c to 97c after reporting a 114% rise in annual recurring revenue to $26.8m at the end of March. Fourth-quarter revenue increased 13% on the previous three months.
Blackpearl said the milestone of $30m annual recurring revenue was fast approaching, and the growth case was now proven.
KMD Brands, last traded at 6.7c, went into a trading halt while it completed the sale of 169.3m new shares that weren’t taken up in the retail rights offer, at 6c a share.
Shareholders took up 52% of their entitlements or 182.6m new shares, and KMD raised $11m, with applications worth $4.5m for additional shares that will be included in the shortfall bookbuild. KMD earlier raised $44.2m through a placement and institutional rights offer.
Cooks Coffee was up 0005c or 2.17% to 23.5c after reporting a 22.8% rise in sales to $95.8m for the financial year ending March. UK store sales increased 22.1% to $66m and Ireland 24.4% to $29.6m. The store network expanded to 118, from 100.
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