Share prices shrug off surge in inflation

The highest inflation rate in 10 years failed to dampen the New Zealand sharemarket as investors quickly get used to the new economic climate. The S&P/NZ 50 Index closed flat at 12,673.15, up just 1.98 points or 0.02 per cent, after strengthening in the afternoon from a fall to 12,631.64 in the morning.

The index finished an eventful economic week down 0.12 per cent.

There were 47 gainers and 82 decliners over the whole market on volume of 45.17 million share transactions worth $163.48 million.

The market is now operating in an environment of higher inflation and soon higher interest rates too, but unemployment is low and commodity prices have increased.

The Consumer Price Index for the June quarter was up 3.3 per cent — ahead of the expected rise of 2.7 per cent.

Greg Smith, head of research with Fat Prophets, said mild inflation is net positive for the sharemarket in terms of pricing and top-line revenue growth for companies.

“The market will take it in its stride and ultimately acclimatise to the higher inflation,” Smith said.

Michael Hill International, with more than 230 jewellery stores in New Zealand, Australia and Canada, rose 6c or 6.9 per cent to 93c on a strong fourth-quarter sales. Same-store sales increased 7.5 per cent compared with the previous corresponding period and sales for the year were up 8.6 per cent against 2020 and 10 per cent against

2019.

Michael Hill’s digital sales increased by

51.1 per cent and exceeded $30m for the first time. They now represent 6.2 per cent of total sales.

Fellow retailer Hallenstein Glasson was up 9c to $7.40, and Briscoe Group gained 4c to $5.75.

Auckland International Airport increased 8c to $7.55 thanks to increasing activity through its terminals. The airport told the market that passenger volumes increased 747 per cent in May and 196.9 per cent in June compared with the same months last year.

Meridian’s New Zealand customers increased 7 per cent and retail sales volume was ahead 23.5 per cent at an average price that was 7.2 per cent higher for the fourth quarter ending June. Hydro storage increased from 70 per cent to 92 per cent of average in the month to July 13.

Meridian was down 1.5cc to $5.285, Trustpower fell 12c to $7.98, Genesis shed 9c or 2.54 per cent to $3.46, while Contact Energy gained 13c to $8.35.

Chorus recovered 15c or 2.44 per cent to $6.30 and Z Energy was up 4c to $2.83..