Market commentary
WELLINGTON: New Zealand shares rallied to a fourmonth high as some investors were encouraged by betterthanexpected US jobs data and continued central bank support.
The S&P/NZX 50 Index rose 56.18 points, or 0.5%, to 11,558.70 — the highest close since March 5. Within the index, 23 stocks rose, 22 fell, and five were unchanged. Turnover was $123.8 million.
Share markets across Asia rose to their highest level since the end of February, based on the MSCI Asia Index.
The rally was driven by reports that nonfarm jobs in the United States increased by 4.8 million in June, beating the expectation of economists who predicted a lift of 3 million jobs.
The recuperating job market had been taken by some investors as a signal of wider economic recovery and bolstered market sentiment, ASB economist Mark Smith said.
Michael McCarthy, chief market strategist at CMC Markets, said the market was reacting to the good data and ignoring the bad.
‘‘Released alongside that very strong nonfarm payrolls we saw an increase in unemployment claims and weak durable goods orders,’’ he said. ‘‘But that doesn’t seem to faze the market.’’
That indicated markets were being driven by the flood of money central banks were pumping out, and good news was acting as a catalyst to buy.
‘‘Further evidence for that is the gains we are seeing in bonds and the fact that gold prices remain near sevenyear highs,’’ Mr McCarthy said.
Trading volumes have been lighter than usual during the past week, which Mr
McCarthy said may be a reason to be suspicious of the rally.
Anecdotally, retail investors were driving up prices while institutions had already sold down their portfolios, he said.
‘‘Enthusiastic individual investors are pushing prices, but the pros who are concerned don’t have anything to sell to them.’’
The leaders on the local benchmark yesterday were mostly stocks considered to be defensive in nature.
Internet infrastructure provider Chorus was up 3.8% at $7.67 and Contact Energy gained 3.7% at $6.70.
Retirement property developer Summerset Group Holdings rose 3% to $6.59 and Stride Property advanced 2.7% to $1.91.
Fuel retailer Z Energy rose 2.2% to $2.81, while New Zealand Refining Company dropped 3.9% to 74c.
Fisher & Paykel Healthcare slipped 0.4% to $34.50. The stock is up 7.8% this week following on from its blockbuster earnings result on Monday.
Among other exporters, Pushpay Holdings dropped 3.6% to $9.06, Tourism Holdings fell 1% to $1.90 and Skellerup Holdings edged 0.5% lower to $2.12.
Kathmandu Holdings posted the day’s biggest decline, dropping 5.5% to $1.20. Yesterday, the retailer bounced 11% after it said it would be profitable at an operational level for the rest of the year. The stock is still up 4.4% this week.
Outside the benchmark, Pacific Edge shares more than doubled in value on confirmation of acceptance under a key US medical regulation for its Cxbladder cancer test. The shares jumped 103.7% to 55c from 27c on Thursday. — BusinessDesk