Market Report 28.1.12

Global equity markets crept higher this week, despite the continued machinations of the Greek debt situation and sabre rattling at Davos by Angela Merkel, says Forsyth Barr.

The NZX50 followed this trend by gaining +0.6% to close at 3,295, albeit on low volumes impacted by holidays in the US, Asia and Australia.

Rakon had a renaissance week, gaining +28.8% to trade back up to levels not seen since November last year. At the bottom end of the field, Cavalier (-7.8%) and Fisher & Paykel Healthcare (-7.8%) fought it out for bottom rung on the ladder, with the latter’s price being impacted by a further rise in the NZD.

The RBNZ was widely anticipated to leave the Offi cial Cash Rate unchanged at 2.5% this week and that is exactly what it did, producing a statement with entirely predictable content; export prices up but the NZD taking the edge off this benefit, a domestic economy still producing modest growth and Canterbury reparation work providing a boost at some stage but timing still uncertain. It still seems that interest rates will be on hold for the bulk, if not all, of 2012, but not as long as the Fed gave indication of this week, with indications that rates will remain “low” in the US until 2014.

Pub and club gaming statistics released on Wednesday provided nothing for SKYCITY shareholders to be worried about. Growth in non-casino spend in the Dec qtr was +2.1% vs. Sept qtr vs. pcp +2.9% but machine numbers also continue to fall, resulting in growth per average machine numbers of +4.9%.

Contact Energy provided its monthly operational update which was a disappointment for analysts, however current hydro conditions may provide more favourable trading over the second half of the financial year.

 Finally, NZ Oil & Gas announced it is writing off the remaining value of its investment in Pike River, due to how it now sees the receivership sale process as likely to play out.

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