Relief rally sweeps NZ sharemarket

New Zealand shares followed US markets higher after a strong set of corporate earnings gave investors a confidence boost.

Thursday, April 28th 2022, 7:15PM

by BusinessDesk

The S&P/NZX 50 Index rose 148 points, or 1.3% percent, to 11,875.35. Turnover was $245 million.

Positive earnings reports from global giants Microsoft and Visa helped US markets make a marginal gain overnight after falling between 4% and 13% in the past month.

Oanda market analyst Jeffrey Halley said a late release from Facebook parent Meta sent US futures higher and boosted the Asian trading session.

“That has been enough to spark a relief rally of sorts in Asia today, although a barrage of infrastructure spending talk in China helped lift the gloom in China markets yesterday,” he said.

The good mood spilled over in the local share market where stocks that have been sold off in recent months saw the biggest rebounds.

Vista Group jumped 5.6% to $1.89, Serko rose 4.2% to $5, Pacific Edge was up 3.4% at 91 cents, and Eroad climbed 3% to $3.09. All have fallen roughly 30% so far this year.

Tourism Holdings jumped 5.2% to $3, despite the Australian competition regulator saying it was concerned a proposed acquisition may hurt competition in a statement today.

Restaurant Brands increased 5.6% to $13.08 after it said sales were up 6% in the first quarter at $275.4m, due to the addition of 11 new stores. Sales were up half a percent in each individual store in NZ – its largest market – while Australian sales were up 1.6%, Hawaii up 2.1%, and California up 0.3%.

While stocks were broadly higher today, the windfall didn’t land for everyone.

Fonterra Shareholders' Fund Units fell 3% to $2.96 with the government having agreed to push forward legislation to support the capital structure changes the co-operative wants.

Jarden analyst Arie Dekker said this was an important step forward for the fund, but the government was also adding scrutiny to Fonterra’s farmgate milk price, which could put non-commercial influence on the price.

Some small cap stocks struggled: Plexure Group lost another 4.5% to 28 cents and My Food Bag dropped 4.1% to 94 cents – unable to hold above $1 while investors suspect its founders may soon sell more shares.

The index’s largest stock, Fisher & Paykel Healthcare, fell almost 2% and was trading at $21.24.

The NZ dollar declined to 65.31 US cents at 3pm in Wellington, from 65.71 cents yesterday as the US currency gained ground on the expectation of a Federal Reserve rate hike next week.

The currency traded as low as 64.76 against the greenback, the lowest since mid-2020.

Imre Speizer, Westpac’s head of NZ strategy, said investors should expect further weakness during the month ahead.

The kiwi could get as low as 65 cents, he said, with the US dollar making further gains as the Federal Reserve makes good on its hawkish stance.

“In the second half of 2022 though, the Federal Reserve story should be fully priced, and commodities will again dominate, pushing the NZ dollar above 70 cents,” he said.

Tags: Market Close