NZ sharemarket has biggest single-day rise in seven months

The New Zealand sharemarket snapped out of its malaise with a strong rally of 1.75% – the biggest single-day rise in seven months.

Thursday, May 16th 2024, 6:27PM

by BusinessDesk

The S&P/NZX 50 Index took off at midday in tandem with the Australian market and closed at 11,728.06, up 202.18 points or 1.75%.

The previous gain of that size was 1.78% on Nov 2. There were 94 gainers and 37 decliners on the main board, with 38.61 million shares worth $135.04m changing hands.

Across the Tasman, the S&P/ASX 200 Index had also risen 1.75% to 7,889.4 points at 6pm NZ time.

Shane Solly, portfolio manager with Harbour Asset Management, said the broad-based rally showed how much had been stripped out of the local market – with many leading stocks rising.

“The United States markets are at all-time highs after a softer-than-expected consumer price index and weaker retail sales. Bond yields went lower, and equities had a better tone.

“Announcements from Fonterra and Kiwi Property fired up people’s imagination, and it doesn’t take much for the market to turn,” Solly said.

The US consumer price index increased 0.3% in April, less than the 0.4% estimate, and the annual inflation of 3.4% was in line with expectations. Retail sales were flat in April, with economists expecting a 0.4% lift.

The S&P 500 broke through 5300 points for the first time after gaining 1.17% to 5,308.15; the Dow Jones Industrial Average was up 0.88% to 39,908; and the Nasdaq Composite increased 1.4% to 16,742.39.

Fonterra Shareholders’ Fund was up 24c or 7.02% to $3.66 after the dairy co-operative told the market it was looking to sell its global consumer (including Anchor, Mainland and Kapiti brands), Fonterra Oceania and Fonterra Sri Lanka businesses – all non-core assets.

Fonterra, which is terminating its on-market share buyback, wants to focus on being a business-to-business dairy nutrition provider, working closely with ingredients and foodservice customers to improve value. These divisions represented 93% of milk solids sold and a total revenue of $21.3 billion in the 2023 financial year.

Kiwi Property rose 3.5c or 4.35% to 84c after announcing the conditional sale of the landmark Auckland Vero Centre to a Hong Kong conglomerate for $458m, a 1.9% discount to the September valuation. The office building in Shortland St has returned Kiwi 11%.

Solly said this was an important transaction for Kiwi as it could redeploy capital into higher-returning assets such as town centres. The market had also been wary about large office assets.

Fisher and Paykel Healthcare was up 51c or 1.79% to $29.06; Ebos Group gained 38c to $35.13; Infratil increased 31c or 2.95% to $10.81; Skellerup added 12c or 3.17% to $3.90; Freightways collected 24c or 3% to $8.24; and a2 Milk rose 35c or 5.13% to a 14-month high of $7.17.

The energy sector had a strong day. Meridian was up 16c or 2.66% to $6.17; Mercury gained 17c or 2.65% to $6.59; Contact added 21c or 2.39% to $9; Manawa increased 18c or 4.44% to $4.23; and Vector improved 10c or 2.74% to $3.75.

In the retirement sector, Ryman Healthcare rose 33c or 8.75% to $4.10, and Oceania Healthcare was up 3c or 5.56% to 57c. Solly said broker research had detailed improving cashflow in the sector.

In the retail sector, Briscoe Group, which held its annual meeting, was up 15c or 3.57% to $4.35, and Hallenstein Glasson gained 13c or 2.48% to $5.38.

Scales Corp increased 7c or 2.27% to $3.15 after announcing a $47.5m deal to buy 240ha of apple orchards (including 126ha leased) from Hastings-based Bostock Group.

Scales is also buying the 50% shareholding in Profruit (2006), which will become a wholly-owned subsidiary. At the same time, Mr Apple is selling the 186ha Blyth and Te Papa orchards to improve the brand’s margins.

Other gainers were ANZ Bank, up 80c or 2.66% to $30.90; Vulcan Steel, rising 34c or 4.76% to $7.49; Serko, adding 17c or 5.59% to $3.21; and PGG Wrightson, improving 5c or 3.18% to $1.62.

AFT Pharmaceuticals rose 18c or 6.77% to $2.84; Property for Industry increased 6c or 2.75% to $2.22; and Restaurant Brands was up 11c or 3.57% to $3.19.

Tags: Market Close