MARKET CLOSE: NZ shares join global rally; Air NZ, Port of Tauranga gain
By Rebecca Howard
May 8 (BusinessDesk) - New Zealand shares pushed higher, led by Air New Zealand and Port of Tauranga, as the local bourse joined a global rally after Emmanuel Macron was elected president of France with a business-friendly vision of European integration.
The S&P/NZX 50 index rose 61 points, or 0.8 percent, to 7,426.460. Within the index, 26 stocks rose, 13 fell and 11 were unchanged. Turnover was $116 million. Across the Tasman, the S&P ASX 200 Index was up 0.5 percent while Japan's Topix added 2.3 percent.
"We had a market-friendly French election result this morning and we had strong jobs numbers in the US and so the political risk that's been weighing on a number of fronts might be receding a bit," said Greg Smith, head of research at Fat Prophets in Auckland. In the US, nonfarm payrolls surged by 211,000 last month after a paltry gain of 79,000 in March, and the unemployment rate dropped to 4.4 percent, near a 10-year low and well below the most recent Federal Reserve median forecast for full employment. He also noted that some of the tensions between North Korea and the US seem to be abating.
With little domestic news to drive markets the improved sentiment meant investors largely turned to high-yielding blue chips, Smith said. He noted that despite stronger domestic inflation the central bank is unlikely to be lifting interest rates any time soon. Economists are widely expecting it to keep rates on hold at a record low 1.75 percent on Thursday. While they expect it to signal rate hikes in late 2018 rather than September 2019, any increases are still a long way off. "Even though interest rates are going to go up ultimately, the yield plays are still looking attractive," said Smith.
Air New Zealand led the market higher, adding 2.6 percent to $2.74. Fisher & Paykel Healthcare, which is benefiting from the recent slide in the New Zealand dollar, was up 2.4 percent at $10.19. Xero added 1.8 percent to $21.38, as investors start to take positions ahead of its results that are due Thursday.
Dual-listed Westpac Banking Corp shed 0.1 percent to $36.37. Westpac's New Zealand division contributed A$435 million to the group's first-half cash earnings of A$4.02 billion, up 3 percent from a year earlier. While the stock ended lower, the "result has gone down relatively well after some mixed results last week," said Smith.
The market was weighed on by a 2.9 percent fall in Tourism Holdings to $3.69 and a 2.9 percent slide in Australia and New Zealand Banking Group to $32.
Comvita continued to struggle after analysts cut their valuation on the stock late last week and there jitters about the discovery of the myrtle rust fungal plant in the Far Nort. The stock shed 1.9 percent to $6.33.
Tegel also remained out of favor after last week's news that chairman James Ogden has unexpectedly quit the board effective immediately after less than a year overseeing the poultry company's direction as a publicly listed company, without an explanation. It ended down 0.9 percent at $1.09.
NZME shares rose 5 percent to 84 cents. Smith said much of the markets attention has been focused on Australasian news publisher Fairfax Media after it confirmed to investors that a "non-binding indicative proposal" from US-based private equity firm TPG to buy its three most powerful Australian newspaper titles and the company's real estate website, Domain.
The proposal would leave Fairfax's New Zealand news assets in what The Australian newspaper today described as "a sorry grab-bag of rump assets". The New Zealand Commerce Commission last week declined the proposed merger between Fairfax NZ and NZME, the NZX-listed publisher of the New Zealand Herald and a string of regional newspapers and associated websites, saying the tie-up would create too dominant a single news producing group that would risk a loss of 'plurality' of opinions and coverage necessary to a healthy democracy.