MARKET CLOSE: NZ shares rise ahead of earnings season; Steel & Tube, Westpac gain, Z, Skellerup fall

Thursday 4th February 2016

New Zealand shares rose in an absence of corporate news ahead of earnings season. Steel & Tube Holdings and Westpac Banking Corp led the advance while Z Energy and Skellerup Holdings dropped.

The S&P/NZX 50 Index rose 4.3 points, or 0.1 percent, to 6,137.7. Within the index, 23 stocks fell, 18 rose and nine were unchanged. Turnover was $127 million.

The local bourse lagged behind markets across Asia, particularly resource-rich Australia, which rebounded after a recovery in the price of oil. The S&P/ASX 200 Index gained 2.1 percent, while Hong Kong's Hang Seng rose 1.5 percent and China's Shanghai Composite advanced 1.1 percent. Yesterday, the ASX 200 fell 2.3 percent, the worst trading day this year with more than A$34 billion wiped off the market's value.

"Australia had a very weak day yesterday while our market held up a lot better, and I think that's why you've seen a much stronger rebound in the Australian market today," said Michael Milne, investment advisor at Craigs Investment Partners. "That's true for how the whole year's run - our market's been a lot more insulated and less vulnerable. The Australian market's got a lot more exposure to oil and the resource sector, which we don't have to the same extent."

Local investors are awaiting company earnings season, Milne said, with people on the sidelines "until they get confirmation either way" about the strength of earnings growth.

Steel & Tube Holdings led the index, up 3.3 percent to $2.20.

Dual-listed stocks dominated gainers, with Westpac rising 2.9 percent to $32.70 and Mighty River Power gaining 2.4 percent to $2.60. A2 Milk Co rose 2.3 percent to $1.76, Kathmandu Holdings grew 1.9 percent to $1.58, and Australia & New Zealand Banking Group climbed 1.6 percent to $26.15.

Z Energy fell 2.6 percent to $6.45. The stock rallied last year before falling on Dec. 18 after the Commerce Commission announced it had delayed its decision on whether to approve Z's application to buy Chevron New Zealand's service stations until the end of April, adding about $10 million to the cost of the acquisition.

"Everyone's waiting to see what happens with the Chevron deal," Craigs' Milne said. "The market was really hoping to have some resolution on that by now, and the date being pushed back a bit does create a bit more uncertainty. It's also a stock that has had a really strong run up last year, and with the volatile start to the year in terms of equity markets, people are questioning the level of volatility they're happy to withstand, and if taking a bit of profit off the table is a sensible thing."

Skellerup Holdings dropped 2.1 percent to $1.42, SkyCity Entertainment Group shed 1.7 percent to $4.52, and Tower fell 1.7 percent to $1.78.

Precinct Properties dropped 1.6 percent to $1.225, and Orion Health Group fell 1.3 percent to $3.

Fonterra Shareholders' Fund dropped 0.7 percent to $5.91. Fonterra Cooperative Group's Darnum plant in Australia, which it's rolling into a joint venture with China's Beingmate, is expected to start producing infant formula products for the venture's Chinese customers in the second half of 2016.

BusinessDesk.co.nz

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