Cooler-than-expected US consumer price figures overnight surprised some local investors and gave hope to others, leading to New Zealand’s sharemarket being flat through the day before dipping into the red by early evening.

In the US, the consumer price index rose 0.1% in November, versus a forecast for a 0.3% gain. 

The NZ Treasury’s half-year economic and fiscal update was also revealed today, with the Treasury now expecting a mild election-year recession but predicted the economy will bounce back.

The S&P/NZX 50 index fell 16.4 points, or 0.14%, to 11,585.00. Turnover was $170.2 million.

Devon Funds head of retail Greg Smith said the US November monthly inflation rise of just 0.1% was the smallest in more than a year. 

This would be welcome news to officials at the Federal Reserve, who wanted to step down the pace of rate hikes, he said.

Westpac Banking Corp announced that its chair John McFarlane will be resigning from his role at the bank’s annual meeting in December 2023. The company’s shares were up 0.2% to $25 today.

In other banking shares, ANZ Bank was down 0.04% to $25.35, and Heartland Group fell 0.6% to $1.82.

Air NZ was flat at 78.5 cents a share after the national carrier announced it had chosen four companies to develop the technology and infrastructure needed to run a zero-emissions demonstrator flight in 2026.

Air NZ aims to run a commercial flight by 2026 as proof of concept after announcing recently that it had a plan to replace its domestic fleet with zero-emission aircraft from 2030. 

Shares in medicinal cannabis company Rua Bioscience were flat at 24.5 cents after the Financial Markets Authority announced it would take action against Auckland-based retail investor Kok Ding Cheng for the alleged market manipulation of the company's shares.

The case is centred on five small orders for Rua’s shares that Cheng made over 10 days in late 2020 via a broking account he held with ASB Securities. It is alleged this was done to artificially move the share price.

Other listed medicinal cannabis stocks, Greenfern Industries and Cannasouth, were down 2.6% to 76 cents, and 1.7% to 29 cents respectively.

Email services provider Black Pearl rose 15.8% to 44 cents, a positive jump for the company which has been battling a sinking share price since it listed almost two weeks ago.

One more sleep before the Fed

The cooler-than-expected inflation meant the Fed’s expected 50-basis-point hike was “pretty much locked in”, Smith said.

With the Bank of England and the European Central Bank also expecting 50bp hikes at their meetings this week, it would raise the question of whether central banks were on the same page – and why it appeared that NZ's Reserve Bank wasn’t on that list, he added.

Today, the NZ dollar was trading at 64.45 US cents at 3pm in Wellington, up from 63.94 US cents yesterday.

Currency trader OFX said in a note that the Kiwi dollar had been stronger against the greenback this morning. Last night’s US inflation data drove up risk appetite among lower US interest rates, which led to a fall in the US dollar.

The NZ dollar jumped as high as 65.13 US cents after the data came out but had settled at 64.45 cents by 3pm. The last time the kiwi was in 65c territory was back in June earlier this year.

ASB economist Nathaniel Keall wrote that as the CPI data had been on the “softer side” of expectations, the markets had “seized” on that fact as evidence inflation was receding and the US Federal Reserve wouldn’t have its work cut out for it.

(This story has been amended to correct the percentage fall in the NZX50)