Paul Robertshawe, chief investment officer with Octagon Asset Management, said it was a constructive day and the general tone of the market felt okay.
The market is eagerly awaiting the Reserve Bank of NZ (RBNZ) monetary policy review on Wednesday, with mixed views on a possible hike in the Official Cash Rate (OCR) to 2.5%.
Robertshawe said the market was still pricing in an 80% chance of an increase, but with the oil price coming down and the US-Iran war holding, more people were talking about keeping the cash rate on hold.
“This would be good for confidence and the economy,” he said. “The New Zealand savings rate is at its highest level since the Covid pandemic – people have built in precautionary savings.”
ASB said the big four banks were split, but “we expect the Reserve Bank to hold the OCR at 2.25%. Monetary policy-making during an economic shock is a bit like jumping at a crocodile in a dimly lit room.
“Data to confirm if the inflation crocodile is real and has teeth is due after (this week’s) monetary policy review, and we think the decline in oil prices gives the Reserve Bank time to wait for this,” ASB said.
ANZ said overall card spending lifted 0.1% in June, with annual growth accelerating to 5.8%.
The ANZ World Commodity Price Index was down 1% in June, with all components falling except meat and fibre – largely caused by the oil price fall as Middle East tensions eased and the Hormuz Strait began reopening.
Local stocks
Infratil increased 30c, or 1.98%, to $15.42 after telling the market its major investment in CDC Data Centres has increased from A$1.76 billion (NZ$2.1b) to A$9.21b, reflecting a 23.6% gain in valuation to a mid-point of A$ 18.5b, up $3.5b, for the June quarter.
Infratil, with a 49.72% stake, said CDC’s valuation increase was driven by strong growth in contracted capacity to more than 1GW, the acceleration of its build programme, and the expansion of the total pipeline from 2.6GW to 3.GW through full-year 2040.
It’s rumoured that CDC is likely to secure a contract to supply 500MW of capacity to the American artificial intelligence company Anthropic.
Fisher & Paykel Healthcare was up 64c to a three-month high of $40.35, and a2 Milk continued its climb, gaining 25c or 2.75% to $9.35.
Robertshawe said a2 Milk went from the fifth to the fourth-strongest brand when the China 618 e-commerce shopping festival ended (on June 18).
“The brand hasn’t suffered from the product recall in the US, but I’m not sure about the restocking and how much shipping and flying (product) a2 Milk is doing.”
UBS Group AG has increased its stake in a2 Milk from 5.33% to 6.5%. “They are a believer – or who they represent,” Robertshawe said.
Ebos Group increased 51c or 2.43% to $21.49; Mainfreight gained 61c to $64.29; Vista Group rose 15c or 6.52% to $2.45; Delegat Group was up 18c or 4.46% to $4.22.
T&G Global increased 11c or 4.6% to $2.50; Michael Hill gained 1.5c or 3.7% to 42c; and Blackpearl Group added 3c or 5% to 63c.
Carpet maker Bremworth, established in 1959, fell 14c, or 15.73%, to 75c following its shareholders’ opposition to a takeover by American flooring manufacturer Mohawk Industries.
Largest shareholder David Ferrier and Mangawhai Collective, and TR Harrison Securities Trust, with stakes totalling 21.8%, told the market they will vote against the scheme of arrangement with Auckland-based Floorscape, a subsidiary of Mohawk.
The takeover offer of 95c-$1.05 a share (cash 75c and capital distribution of 20-30c a share) – reduced in February from $1.05-$1.15 a share – was last week backed by the NZ Commerce Commission.
Ferrier said in a letter to Bremworth, “We are not satisfied that the transaction is in the long-term interests of the wool industry, its participants or customers.
“We are mindful that the scheme continues to take its toll on Bremworth’s value and potential. The company continues to incur extraordinary internal and external costs in connection with the scheme,” Ferrier said.
Other decliners were Gentrack, down 7c or 1.83% to $3.75; PGG Wrightson, down 6c or 2.65% to $2.20; and The Warehouse, down 1.5c or 2.59% to 56.5c.
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