Stock index rises amid earnings-season optimism from investors and a stronger profit result at Freightways
New Zealand shares rose yesterday, snapping seven consecutive days of declines, on optimism the earnings season is relatively strong. Spark New Zealand led gainers and Freightways advanced after reporting stronger profit.
The S&P/NZX 50 Index rose 30.97 points, or 0.6 per cent, to 5727.42. Within the index, 24 stocks rose, 20 fell and six were unchanged. Turnover was $116 million.
The benchmark rose for the first time since Wednesday August 5, as investors returned to the market as financial reporting season got under way.
Spark rebounded from a twomonth low to be the best performer on the day up 4.3 per cent to $2.775. The telecommunications firm is due to report annual profit of $356 million, up 7 per cent from a year earlier, on Friday.
“We’ve had a rebound here as reporting season is getting under way,” said Grant Williamson, director at Hamilton Hindin Greene. “Spark has been under a fair bit of pressure under recent times. Pretty much bargain hunters coming back into the stock after a period of weakness,” Williamson said.
“The market has done pretty well, it’s still holding up quite well, so there are reasonable expectations that most of our companies are going to report pretty reasonable results.”
Meanwhile, Freightways advanced 1.8 per cent to $5.65. The courier and logistics firm, which is seen as a bellwether for the Kiwi economy, reported a 4 per cent lift in annual profit to $43.3 million but warned New Zealand’s faltering economy is likely to see growth slow in the next financial year.
“They’re a little bit more cautious going forward which is an indicator that most are aware that there’s a bit of a slowdown in the local economy but still forecasting a bit of growth so all in all not that bad,” Williamson said.
Contact Energy rose 1.6 per cent to $5.24. The utility company will look back on a “disappointing” financial performance in the year ended June 30 and see it as a transitional period, chief executive Dennis Barnes said as the company posted a 43 per cent decline in net profit to $133 million and a 29 per cent drop in underlying earnings, its preferred measure, to $161 million.
Tower rose 0.5 per cent to $2.15. The general insurer said departing chief executive David Hancock will get a long-term incentive payment of $500,000, as well as a short-term incentive payment.
Metro Performance Glass was the worst performer on the day, down 2.9 per cent to $1.32. The regulatory arm of the stock market operator, NZXR, queried the glass manufacturer’s sharp share price decline, after the stock fell 17 per cent, or 27c, between August 3 and yesterday. Metro confirmed it has maintained continuous disclosure and couldn’t explain the drop.