Latest / Best of Business / Remy Morgan: Milford Asset Management expert on the market reactions to the 50bp OCR cut

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Remy Morgan: Milford Asset Management expert on the market reactions to the 50bp OCR cut · Best of Business

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  Speaker 1: You're listening to a podcast from News Talk sed B
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  Speaker 2: Either. Have you looked at the exchange rates since the
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  Speaker 2: OCR announcement? Meaning fuel and everything which is important will
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  Speaker 2: be more expensivele bears, Thank you very much for bringing
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  Speaker 2: us to this. Right now, it's quarter past six and
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  Speaker 2: Remy Morgan Milford Asset Management is with us. Hi, Remy, Hi, Heather.
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  Speaker 2: How did the market react to that decision today?
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  Speaker 3: We saw markets readjusting their interest rate expectations lower in
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  Speaker 3: response to that fifty basis point cut, and that was
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  Speaker 3: because it wasn't fully priced in. We saw market expectations
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  Speaker 3: for the November decision adjusting to fully price another twenty
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  Speaker 3: five basis point cut. We saw wholesale swapbrates offered lower. Notably,
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  Speaker 3: that key two year rate was down around seven basis
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  Speaker 3: points shortly after the release. And the other key call
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  Speaker 3: out was that INZA dollar, which we can further immediately
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  Speaker 3: dropping around one percent against the US dollar.
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  Speaker 2: Yeah. What about the INSIDEX have we seen any major
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  Speaker 2: moves there? Yeah?
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  Speaker 3: So over the low last week leading into today, the
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  Speaker 3: INSIDEX moved sharply upwards and finally above record highs. Again,
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  Speaker 3: it's only taken about four years, and that was likely
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  Speaker 3: in anticipation of more rate cuts to come following that
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  Speaker 3: week GDP print that we had the other week. Some
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  Speaker 3: notable moves in share prices that are up around ten
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  Speaker 3: percent over the past week are in cyclical retail companies
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  Speaker 3: like sky City and Catman, do brands, housing linked retirement
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  Speaker 3: companies Ryman and Somerset, and real estate companies, and that
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  Speaker 3: larger fifty basis point cut today further supported moves higher.
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  Speaker 3: We saw the index closing zero point two five percent
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  Speaker 3: on the day, marking a rally of over two percent
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  Speaker 3: the past week, and closing on a fresh new high.
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  Speaker 2: How important do you think was the detail that the
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  Speaker 2: Reserve Bank released for the market.
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  Speaker 3: It was just a policy announcement this time, and not
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  Speaker 3: a full statement with a new set of Reserve Bank
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  Speaker 3: forecasts as we had back in August, And because it
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  Speaker 3: wasn't fully clear to the market which way the RBNZ
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  Speaker 3: would go, that made both the decision and the signals
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  Speaker 3: that the release sent to the market even more important.
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  Speaker 3: Now the messaging signaled openness to cut further, and I
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  Speaker 3: think that supported that market move lower In wholesale interest rates,
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  Speaker 3: which helps to give that intended transmission effect.
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  Speaker 2: Okay, where do we go from here?
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  Speaker 3: For companies in the insed X, particularly those more interest
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  Speaker 3: rates sensitive and consumer focused companies, there might be some
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  Speaker 3: further optimism to come as those lower interest rates continue
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  Speaker 3: to transmit through the economy, but it is important to
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  Speaker 3: remember that today's market reactions are a point in time
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  Speaker 3: reaction and developments in the data and the economy can
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  Speaker 3: see markets move potentially either way.
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  Speaker 2: In response, Remy, thanks very much, appreciate it. Remy Morgan
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  Speaker 2: Milfit Asset Management.
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