FX.co ★ New Zealand Stocks Finish at 5-Month High

The S&P/NZX 50 Index experienced a notable gain, climbing 0.6% to approximately 12,962 on Monday, marking its highest close since February. This upward movement was fueled by optimism following inflation data that was not as high as anticipated. The Consumer Price Index (CPI) increased by 0.5% in the second quarter, down from 0.9% in the first quarter, and below the projected 0.6%. Meanwhile, the annual inflation rate rose to 2.7%, up from 2.5%, yet fell short of the 2.8% prediction. These figures were less concerning than initially feared, providing the Reserve Bank of New Zealand (RBNZ) with potential leeway to consider easing policies in its August meeting, although reaching the upper range of the 1–3% target band this year now seems unlikely. Market projections have adjusted, with a 75% probability of a 25 basis point rate cut, an increase from the previous 61% likelihood before the data release. Gains were prominently led by consumer durables and distribution services sectors, highlighted by a 6% rise in KMD Brands and nearly 1% in Vulcan Steel. Other significant increases were seen in Auckland Airport (+1.8%), A2 Milk (+1.6%), Fisher & Paykel (+1.5%), Spark NZ (+1.8%), and Vector (+2.1%). On the other hand, Contact Energy experienced a slight decline of 0.1% amidst weaker mass market sales, while Equifax reaffirmed General Finance’s “BB” credit rating with a stable outlook.