Global rally pushes NZ market up
NZ Oil & Gas, Pacific Edge lead the way while investors ponder a likely .25% rise in the OCR on Thursday
New Zealand stocks edged higher in a global rally as data showed signs of economic growth, while expansion in the domestic economy is likely to see the Reserve Bank hike the official cash rate for a third time this Thursday. Nuplex Industries, Pacific Edge and A2 Milk Company rose.
The NZX 50 Index rose 4.912 points, or 0.1 per cent, to 5187.349. Within the index, 25 stocks gained, 11 fell and 14 were unchanged. Turnover was $112 million.
On Friday, Wall Street benchmark indexes closed at a record high, as United States unemployment remained steady at 6.3 per cent.
Stocks across Asia were further bolstered by data showing Japan’s economy expanded at a 6.7 per cent annualised pace in the first quarter, beating economists’ 5.6 per cent forecasts while China said exports rose 7 per cent last month from a year earlier. Hong Kong’s Hang Seng Index rose 0.7 per cent in afternoon trading, while Japan’s Nikkei 225 lifted 0.4 per cent.
NZ Oil & Gas rose 2.5 per cent to 81.5c, leading the market higher. Pacific Edge gained 2.4 per cent to 86c. Nuplex, the specialty chemical maker, rose 1.5 per cent to $3.36 and A2 Milk advanced 1.3 per cent to 78c.
On Thursday, central bank governor Graeme Wheeler will lift the OCR by a quarter point to 3.25 per cent according to 16 of 17 economists in a Reuters’ survey. The governor’s commentary surrounding the pace of future hikes will be studied closely since the bank’s March monetary policy statement figures have shown inflation accelerated at a lower-thanexpected 0.3 per cent in the first quarter, while there are signs heat in the housing market is dissipating at least partly in response to curbs on low-equity loans.
“It’s really a double-edged sword because interest rates going up is showing there is good growth in the economy, therefore companies’ earnings should be improving but on the other side investors will start to favour leaving money in the banks, rather than put it into the share market because the banks are offering better rates to them,” said Grant Williamson, director at Hamilton Hindin Greene. “Interest rates, on a historical basis, are still very low.”
Stock market operator NZX fell 0.8 per cent to $1.33.
Telecom rose 0.6 per cent to $2.715. The company announced Kevin Roberts, chief executive worldwide of Saatchi and Saatchi, has retired from the board after nearly six years and will be replaced by Yoobi co-founder Ido Leffler.
Units in Fonterra Shareholders’ Fund rose 0.2 per cent to $5.96. Fonterra Cooperative Group has tapped Robert Spurway to head up its global operations division in a newly created role as New Zealand’s dominant dairy exporter chases global ingredient sales to offset volatility in dairy prices. Units in the fund give investors access to the dairy exporter’s dividend stream.
MightyRiverPower advanced 0.4 per cent to $2.27. The Governmentcontrolled power company’s proposed issue of up to $300 million of July 2044 bonds has been rated BB+ and assessed as “intermediate equity” by Standard & Poor’s, meaning the ratings company will classify 50 per cent of the interest paid as dividends.
Fletcher Building, New Zealand’s largest listed company, slipped 0.4 per cent to $9.15. Xero, the cloudbased accounting software firm, rose 0.03 per cent to a near two-month low at $29.42.
Outside the benchmark index, Green Cross Healthcare fell 1.3 per cent, or 2c, to $1.57 as the pharmacy chain and community health centre owner shed rights to its final 3.5 cents dividend.