New Zealand Stocks Steady as Fed Rate Hike Fears Ease

The New Zealand stock market remained stable, with the S&P/NZX 50 index closing at 13,699.02 points. This followed weaker-than-anticipated job growth in the U.S. during September, which reduced speculation about further interest rate hikes by the Federal Reserve.

The easing of U.S. rate hike expectations often leads to lower global bond yields, which can support stock markets by reducing borrowing costs and easing pressure on valuations. Despite this, investors are mindful of tight credit conditions in New Zealand, as evidenced by a drop in total new lending to NZ$12.38 billion in August, down from NZ$15.05 billion in July. Similarly, residential mortgage lending fell to NZ$7 billion from NZ$8.27 billion, signaling affordability challenges and stricter bank policies.

Some companies are focusing on long-term investments rather than immediate demand. For instance, fruit packer Seeka approved NZ$15.5 million for a new packhouse and coolstore in Gisborne, while Fisher & Paykel Healthcare agreed to sell land in Drury to Health New Zealand for NZ$45.3 million, tied to a future hospital site.

The decline in new mortgage lending highlights ongoing pressure on borrowers. Fixed mortgage rates in New Zealand are influenced by global bond yields, which can affect offshore wholesale funding and local swap rates. While cooler Fed expectations may ease some pressure on fixed mortgage rates, tight budgets and cautious lending practices continue to dampen housing turnover and refinancing activity.