Sharemarket wins as investors bet central banks will act aggressively to hammer inflation

  • The NZX 50 index gained 0.7%
  • Asian stock markets soared
  • Auckland Airport up 2.2%

The stock market rose on optimism. Aggressive increases in interest rates would bring the spiral of inflation under control.

The benchmark S&P/NZX 50 index advanced 0.7%, or 77.638 points, to 11,187.97 on Thursday. In the broader market, 75 stocks fell and 69 gained with $106 million in shares traded.

Asian stock markets rose after a report showed that US inflation rose at an annual rate of 9.1% in June, the highest level in 40 years, fueling expectations that the Federal Reserve will continue its aggressive rate hikes. interest rate. The Reserve Bank of New Zealand on Wednesday raised its benchmark rate by 50 basis points, its third “double hike” this year.

“The world’s reserve banks are getting pretty aggressive in their efforts to rein in inflation and hopefully that means rates don’t need to be so high in the long run if they can be aggressive enough in the short. term,” Grant Davies said. , Investment Advisor at Hamilton Hindin Greene.

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“Time will tell, but at the moment the market is holding up reasonably well.”

Traders expect another Fed rate hike this month, likely matching last month’s 75 basis point hike, the biggest in 28 years and three times the usual margin.

Fed officials say a recession is possible but not certain. They point to a strong US labor market despite higher borrowing costs.

Davies said recent weakness in commodity prices could give investors optimism that inflation was under control.

Travel is resuming at Auckland Airport, giving investors some optimism.  (File photo)

STOCK

Travel is resuming at Auckland Airport, giving investors some optimism. (File photo)

Auckland International Airport rose 2.2% to $7.38 after the country’s largest gateway reported a 19.3% rise in passenger numbers in May compared to May from last year, although it was down 46.1% from the pre-Covid equivalent in May 2019.

In an overview of last month’s figures, he said passenger volumes were up 37.9% from June last year, but down 37.9% from the pre-equivalent. Covid in June 2019.

“Obviously there’s still a lot of impact from Covid and how the world has changed, but I guess there’s a bit of optimism setting in with Auckland airport today. today,” Davies said.

Cannasouth jumped 9.6% to 40 cents after the company announced that its bioscience subsidiary had signed a supplier agreement with Weeco Pharma in Germany to supply cannabis flower from New Zealand to Europe.

The deal would cost between $12 million and $15 million over the two to three years of the deal, the company said.

Tech firm Trade Window fell 16% to 85c after resuming trading following a share sale to investors.

The company sold $9 million worth of shares to new and existing investors at 70c each, a 30.7% discount from the share’s closing price on Monday. It plans to raise an additional $1 million from existing investors.

The $10 million raised will be used to fund the acquisition of technology company Rfider, bolster its balance sheet liquidity and pay transaction costs, the company said.

Blis Technologies, which makes probiotic mouth and throat products, fell 6.3% to 3c after announcing plans to change its business model away from selling to consumers in global markets to focus on business-to-business sales. It would continue to sell direct to consumers in New Zealand and through the Amazon platform in the United States.

The changes come after a disappointing 2022, with the company posting a net loss of $2.7 million. In the first quarter of 2023, revenue increased 29% to $2.3 million, with an operating loss of $300,000.

The company plans to reduce its workforce, which will help put it back on track for a return to profitability.

– With PA