Market commentary

AUCKLAND: The New Zealand sharemarket was rattled yesterday by the suggestion by ANZ the Reserve Bank could still hike the official cash rate (OCR) twice this year. The S&P/NZX 50 Index had a late rise after reaching an intraday low of 11,782.24 and closed at 11,862.95, down 9.37 points or 0.08%. The index finished the shortened week with a fall of nearly 0.6% but it is still ahead more than 0.5% for the year to date. There were 57 gainers and 69 decliners over the whole market on volumes of 21.83 million transactions worth $89.51 million. The market was surprised by the ANZ Research forecast of 25 basis point rises in the OCR for this month and April, taking the rate to 6%. Their economists now believed the first rate cut would occur next February, instead of August this year. The Reserve Bank meets on February 28 and April 10 to provide its latest monetary policy statement. The New Zealand dollar strengthened to A94.35c against the Australian — a oneyear high after sitting at 93c at the end of January. ANZ said the Reserve Bank in November warned if inflation pressures were to be stronger than anticipated, the OCR would likely need to increase further. Data since then had been a series of small but pretty consistent surprises in that direction. The Reserve Bank would be aware restarting hiking cycles when per capita gross domestic product was down 3% might appear counterintuitive. But at the end of the day, it had a job to do — getting inflation sustainably down to 2% in the medium term. ‘‘We just don’t think the Reserve Bank committee will feel confident that they’ve done enough to meet their inflation mandate,’’ ANZ said. Harbour Asset Management portfolio manager Shane Solly said the ANZ forecast was another perspective. There had been a series of economic data at the higher end of expectation and this was making it tougher for the Reserve Bank to think about cutting the OCR. ‘‘There is going to be data pointing both ways — reducing or increasing the OCR — and the Reserve Bank has to be careful about making policy decisions. Companies are not facing pressure from labour costs and hiring people, and it would be a big call for the Reserve Bank to hike the OCR,’’ Mr Solly said. In the United States, the S&P 500 broke the 5000 points mark for the first time during intraday trading but it closed at 4997.91, up 0.057%. In Japan, the Nikkei 225 Index hit a 34year high after gaining 0.44% to 37,024.25 points at 5.45pm. The Bank of Japan said it was unlikely to raise interest rates aggressively, even after ending its negative interest rate policy. At home, Fisher and Paykel Healthcare was down 13c to $24.42; Meridian Energy shed 5c to $5.61; Freightways declined 11c to $8.33; ANZ Bank decreased 80c or 2.72% to $28.66; and SkyCity gave up 4c or 1.89% to $2.08. NZ Rural Land, unchanged at 95c, has completed the sale of a 25% shareholding to Sydney investment firm Roc Partners for $44.2m. NZ Rural will use some of the money to repay the $11.8m convertible note.