In New Zealand, the Reserve Bank Survey of Expectations showed one-year-ahead Consumers Price Index inflation would increase from 2.59% to 3.41%, and two-year-ahead inflation from 2.37% to $2.53%.
Greg Smith, investment specialist with Generate, said inflation had reared its head again.
“Though the Reserve Bank survey was not as bad as it could have been. We are looking at a short-term inflationary shock, and that will be some relief to the bank.
“The market is now pricing in a 40% chance of an official cash rate hike in May, down from 60%,” Smith said.
On Wall Street, the Dow Jones Industrial Average was up 0.11% to 49,760.65 points; the S&P 500 was down 0.16% to 7400.96; and the Nasdaq Composite decreased 0.71% to 26,088.2.
Across the Tasman, the S&P/ASX 200 Index was down 0.46% to 8630.7 points at 6pm NZ time.
The banks were weaker after the Federal Budget changed the rules on negative gearing and capital gains tax discounts in the property investment market.
CBA, more heavily into mortgage lending to investors, had fallen 10.36% to A$153.79. On the NZX, ANZ decreased $1.10 or 2.58% to $41.60, and Westpac declined $2.02 or 4.53% to $42.58.
In a report on New Zealand’s economic outlook, ANZ said the conflict in the Middle East represents a negative national income shock for New Zealand.
”As a net importer of petroleum products, our terms of trade are likely to take a hit even if key export prices remain robust (so far, so good for meat and dairy).”
ANZ has forecast that the Brent crude oil price will be under US$90 a barrel by the end of the year and there will be no fuel rationing. Annual inflation will be 4.4% in the second quarter and 4.1% by the end of the year.
Economic growth this year will be 1.5% and increase to 2.6% and 2.7% in 2027 and 2028. Unemployment will reach 5.5% in the second quarter and 5.8% in the fourth quarter.
ANZ expects the Reserve Bank to hike the Official Cash Rate in July, September and October, taking it to 3%. The NZ dollar should strengthen to A85c against the Australian by the end of the year and A87c by the end of next year.
Spark declined 6c or 2.9% to $2.01; Gentrack was down 13c or 3.15% to $4; Auckland International Airport eased 11c to $8.28; and Scales Corp decreased 28c or 4.41% to $6.07.
Other decliners were AFT Pharmaceuticals, falling 25c or 6.58% to $3.55; The Warehouse easing 2c or 3.1% to 62.5c; Michael Hill down 1.5c or 3.41% to 42.5c; and Eroad losing 5.5c or 5.34% to 97.5c.
Port of Tauranga was up 11c to $8.31; Channel Infrastructure gained 6c or 1.92% to9 $3.19; and Fonterra Shareholders’ Fund increased 24c or 3.58% to $6.94.
The energy sector was stronger, with Mercury rising 20c or 2.9% to $7.10; Contact increasing 27c or 2.8% to $9.90; and Vector up 9c or 1.78% to $5.14.
In the property market, Stride increased 4.5c or 4.04% to $1.16; Property for Industry was up 5c or 2.1% to $2.43; and Kiwi was down 2.5c or 2.8% to 94.5c.
Cancer diagnostics company Pacific Edge, down 0.006c or 3.45% to 16.8c, has completed a placement for $25.4m at 17c a share. The company is now making a rights offer to raise up to $6m.
Radius Residential Care was up 1.5c or 3.9% to 40c after reporting a 14% increase in full-year revenue to $202.28m and a 34% rise in net profit to $9.5m. It is paying an increased final dividend of 1.2c a share on June 11.
AoFrio decreased 0.004c or 5.13% to 7.4c after reporting a 28.1% fall in revenue to $17.2m for the three months ending March compared with the same period last year. Operating earnings (ebitda) recorded a net loss of $400,000 compared with the previous gain of $1.5m. AoFrio had $1.4m in cash.
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