The NZX 50 ends the month on a high note
New Zealand stocks climbed in a large rally on high trading volumes as investors rebalanced portfolios on the last trading day in October.
Friday, October 29, 2021, 6:31 p.m.
The S & P / NZX 50 Index gained 128 points, or 1%, to 13,099.82. Revenue was $ 208.3 million.
Pushpay Holdings led the market higher, up 3.8% to $ 1.90, followed by A2 Milk which was up 3.5% to $ 6.57 and Air NZ, up 3.1 % to $ 1.67. All three stocks had over a million shares traded.
Shares of Move Logistics jumped 7.4% to $ 1.74 after the shipping company issued 13 million shares at an 8-cent premium over its asking price of $ 1.40.
The company is raising $ 40 million in a three-part process, and an institutional right offer was accepted by 93% of eligible institutional shareholders with the leftovers offered in the oversubscribed bookbuild.
Retail shareholders will now be able to assert their right to $ 1.40 in the last part of the capital increase.
Stock trader NZX Limited climbed 1.2% to $ 1.73 after saying its third quarter revenue rose 20% to $ 22.1 million. Its year-to-date revenue is up 13% to $ 64.6 million.
BNZ market strategist Nick Smyth said the stock markets have stood up to the remarkable volatility in the bond markets.
Today, the Reserve Bank of Australia refused to defend its target of controlling the yield curve by 0.1% on a three-year government bond, allowing it to climb nearly eight times to exceed 0.7 %.
A yield curve control policy is when a central bank promises to buy enough bonds to keep its interest rate from climbing above a set target.
Australia’s central bank allowing that target to be exceeded has sparked speculation it will either drop or weaken the policy at its next meeting.
The RBA had previously suggested that it would keep interest rates ultra-low until 2024, but inflation casts doubt on whether this is still possible.
Volatility in Australia has spilled over to the domestic rate market, Smyth said, causing some market interest rates to rise sharply.
âThe 2-year swap rate was 18 basis points higher under extremely illiquid market conditions, reaching its highest level since early 2017 at 2.35%,â he said.
The benchmark 2-year New Zealand swap rate is up 92 basis points this month and is on track for its biggest monthly increase since June 1994.
New Zealand’s yield curve is now ultra-flat, with less than 50 basis points separating 2-year and 10-year government bond rates.
Smyth said the flatter curve was in line with expectations that the RBNZ would slow economic growth by tightening monetary policy going forward.
While this creates a headwind for the stock markets, it supports the New Zealand dollar which briefly climbed above 72 cents US overnight after trading at 68.60 last month.
It was trading at 71.80 cents US by 3pm in Wellington, against 71.60 cents yesterday.
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