MARKET CLOSE: NZ shares rise after RBNZ; RAK up

Thursday 29th April 2010

New Zealand shares edged higher for the first day in three after Reserve Bank Governor Alan Bollard hinted at a gentler cycle of interest rate hikes. Rakon, NZX and Infratil were among gainers.

The NZX 50 Index rose 1.71, or 0.1%, to 3282.271. Within the index, 24 stocks rose, 14 fell and 12 were unchanged. Turnover was $91.5 million.

Bollard tweaked his wording for the timing of the first official cash rate hike to ‘in coming months' from ‘middle of the year' and said the wide gap between official rates and lending rates will make his jobs easier, requiring a more modest pace of increases. The New Zealand dollar fell after the statement.

Rakon, the maker of crystal oscillators used in navigation systems and mobile phones, rose 3.9% to $1.06. NZX gained 2.8% to$1.85 after the government announced a reorganization of securities and exchange regulators into a merged commission. Infratil gained 1.2% to $1.72.

Investors may have been "revising down how much they think the RBNZ will be raising rates," said Stephen Walker, portfolio manager at Devon Funds Management.

NZ Farming Systems Uruguay rose 2.5% to 41 cents. Optimism about demand in global dairy markets prompted Fonterra Cooperative Group to raise its milk fat payment forecast this week.

Australia & New Zealand Banking Group fell 2.6% to A$24.21 on the ASX today, while its NZX traded shares were unchanged at $31.95, after Australia's fourth-biggest lender posted first-half earnings growth while warning of a slow global recovery from recession.

"The scale of the global financial crisis and the depth of the economic downturn in the U.S. and Europe mean we have to be realistic about the outlook," ANZ chief executive Mike Smith said. "Recovery from events of this magnitude will not happen smoothly."

New Zealand Oil & Gas fell 0.7% to $1.54. The company is seeking drilling partners on two new farm-ins with a much larger potential oil and gas-bearing structure than was initially expected.

Steel & Tube Holdings, a supplier of steel building materials, fell about 3% to $2.61, the biggest decline on the index today.

By Jonathan Underhill

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