1 00:00:00,080 --> 00:00:04,120 Speaker 1: Remy Morgan mil Foredacid management is with Mehi Remy Hi. Ever, so, 2 00:00:04,240 --> 00:00:06,480 Speaker 1: how has the market reacted to the OCI cut? 3 00:00:07,800 --> 00:00:10,640 Speaker 2: Yeah, so the twenty five basis point cut today to 4 00:00:10,760 --> 00:00:14,080 Speaker 2: three percent, that was largely expected. But what did surprise 5 00:00:14,160 --> 00:00:18,000 Speaker 2: the market was the rbnz's revisions to its own projection 6 00:00:18,280 --> 00:00:21,240 Speaker 2: for the official cash rate, which it now sees bottoming 7 00:00:21,239 --> 00:00:24,279 Speaker 2: out at two point five five percent instead of two 8 00:00:24,280 --> 00:00:27,840 Speaker 2: point eight five percent. And another surprise was the fact 9 00:00:27,880 --> 00:00:30,800 Speaker 2: that two of the six committee members had voted for 10 00:00:30,840 --> 00:00:33,519 Speaker 2: a fifty basis point cut at this meeting instead of 11 00:00:33,520 --> 00:00:36,960 Speaker 2: twenty five. Now, given these signals from the RBNZ of 12 00:00:37,159 --> 00:00:40,600 Speaker 2: further evening were beyond what the market had actually expected. 13 00:00:41,120 --> 00:00:43,920 Speaker 2: Post the announcement, we saw New Zealand dollar swap rates 14 00:00:43,920 --> 00:00:47,159 Speaker 2: moving lower, and we also saw a weakening of the 15 00:00:46,800 --> 00:00:50,080 Speaker 2: New Zealand dollar, with the New Zealand to US dollar 16 00:00:50,120 --> 00:00:52,480 Speaker 2: exchange rate falling over one percent on the day. 17 00:00:52,840 --> 00:00:54,400 Speaker 1: What's the market expecting from here? 18 00:00:55,720 --> 00:00:58,520 Speaker 2: Yeah, so going into today's meeting, there was only about 19 00:00:58,680 --> 00:01:02,280 Speaker 2: half of a cut price for after today's announcement for 20 00:01:02,320 --> 00:01:04,360 Speaker 2: the rest of the year. But we've actually seen the 21 00:01:04,400 --> 00:01:07,600 Speaker 2: market revise that expectation. Now to more than one full 22 00:01:07,600 --> 00:01:10,200 Speaker 2: cut before the end of the year. So whether that 23 00:01:10,240 --> 00:01:13,280 Speaker 2: market view will be revised further from here will likely 24 00:01:13,360 --> 00:01:16,920 Speaker 2: depend on how the economic data unfolds between now and 25 00:01:16,959 --> 00:01:19,039 Speaker 2: the next Reserve Bank meeting in October. 26 00:01:19,120 --> 00:01:22,000 Speaker 1: Okay, now we're obviously full swing into the reporting season. 27 00:01:22,040 --> 00:01:24,319 Speaker 1: What did the market make of the Fletcher Building results today? 28 00:01:25,600 --> 00:01:28,640 Speaker 2: Yeah, so overall it's been a challenging year for Fletcher 29 00:01:28,800 --> 00:01:31,360 Speaker 2: with the tough market conditions in New Zealand, and that 30 00:01:31,400 --> 00:01:34,280 Speaker 2: did weigh on the result. They did not provide any 31 00:01:34,280 --> 00:01:37,120 Speaker 2: forward guidance, but what management did say was that they 32 00:01:37,200 --> 00:01:40,360 Speaker 2: expect demand to remain soft over the next financial year, 33 00:01:40,560 --> 00:01:44,240 Speaker 2: which could see limited earnings improvement, whereas the market had 34 00:01:44,319 --> 00:01:47,000 Speaker 2: been expecting some improvement in the second half of next 35 00:01:47,000 --> 00:01:50,880 Speaker 2: financial year. But while the economy remains tough, the company 36 00:01:50,960 --> 00:01:54,400 Speaker 2: does continue to focus on reducing cost and is exploring 37 00:01:54,800 --> 00:01:57,640 Speaker 2: business divestments. So we did see the share price bounce 38 00:01:57,680 --> 00:01:59,559 Speaker 2: around a little bit throughout the day, but it closed 39 00:01:59,640 --> 00:02:00,520 Speaker 2: roughly flat. 40 00:02:00,680 --> 00:02:02,120 Speaker 1: And what was the reaction to Spark? 41 00:02:03,480 --> 00:02:06,600 Speaker 2: Yes, so Spark also had a challenging year with economic 42 00:02:06,680 --> 00:02:10,079 Speaker 2: and competitive pressures, but it does appear the business has 43 00:02:10,120 --> 00:02:14,360 Speaker 2: stabilized after some significant cost reductions now, while the earnings 44 00:02:14,360 --> 00:02:17,960 Speaker 2: outlook for next year is a bit lower than market expectations. 45 00:02:18,360 --> 00:02:20,760 Speaker 2: Perhaps the key piece of news was the fact that 46 00:02:20,880 --> 00:02:23,880 Speaker 2: Spark reset its dividend policy to be based off of 47 00:02:24,360 --> 00:02:27,280 Speaker 2: its new definition of free cash flow now. This will 48 00:02:27,520 --> 00:02:30,840 Speaker 2: likely see next year's dividend reset lower than the twenty 49 00:02:30,880 --> 00:02:33,920 Speaker 2: five cents per share that it paid this year. So 50 00:02:34,000 --> 00:02:37,200 Speaker 2: while Spark delivered a week result, it was perhaps better 51 00:02:37,200 --> 00:02:40,520 Speaker 2: than fared, and the prospect of further rate cuts by 52 00:02:40,520 --> 00:02:42,880 Speaker 2: the RB and Z might have helped to lift sentiment 53 00:02:42,960 --> 00:02:44,919 Speaker 2: a bit, and the stock finished up on the day. 54 00:02:45,480 --> 00:02:48,960 Speaker 1: Thanks Remy, appreciate it Realmy Morgan Milford Asset Asset Managements. 55 00:02:49,560 --> 00:02:52,760 Speaker 1: For more from Hither Duplessy Alan Drive, Listen live to 56 00:02:52,840 --> 00:02:55,880 Speaker 1: news talks it'd be from four pm weekdays, or follow 57 00:02:55,880 --> 00:02:57,680 Speaker 1: the podcast on iHeartRadio.