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MARKET CLOSE: NZ shares rally on speculation of flat US rate track; Spark gains

Friday 7th December 2018

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New Zealand shares rose as markets across Asia rallied on speculation the US Federal Reserve will keep interest rates on hold next year, which would maintain the yield attraction of stocks over bonds. Spark New Zealand was up in heavy trading. 

The S&P/NZX 50 index increased 9.1 points, or 0.1 percent, to 8,767.32. Within the index, 21 stocks rose, 24 fell and five were unchanged. Turnover was $129.3 million, of which Spark contributed $28.1 million

Stocks across Asia were modestly higher in afternoon trading, with Australia's S&P/ASX 200 up 0.4 percent, Hong Kong's Hang Seng gaining 0.2 percent and Japan's Topix rising 0.5 percent. A report by the Wall Street Journal that the Fed will hike rates this month and then adopt a more cautious approach was welcomed by investors who saw it as a sign that the interest rate track will be flatter than current expectations. Rising interest rates reduce demand for stocks as investors can lock in a higher return from interest-bearing investments. 

Peter McIntyre, an investment adviser at Craigs Investment Partners, said flat interest rates next year should support global growth, which would make it easier for firms to maintain or increase earnings. 

"That really pushed the market more towards a client-friendly close and we've seen positive leads right throughout Asia today. New Zealand's part of that," he said. 

Spark rose 0.4 percent to $4.20 on more than twice its average volume at 6.7 million shares traded. McIntyre said Spark is well-liked by international investors because of its attractive dividend yield - almost 6.8 percent - and liquidity. 

Among other stocks held for their dividend, Argosy Property rose 0.9 percent to $1.16 and Investore Property increased 0.7 percent to $1.52, both on light volumes.

Chorus was 0.4 percent higher to $4.77 on very light volumes. The telecommunications network operator's $500 million of 10-year bonds started trading today. The notes were heavily oversubscribed, paying annual interest of 4.35 percent before resetting in five years. Some 1.7 million traded on the first day at a yield of 4.15 percent. 

Z Energy led the market higher, up 2.5 percent to $5.70 in slightly smaller volumes than average. The transport fuels company welcomed a government inquiry into the failure of the refinery to Auckland fuel pipeline last year, reiterating its concerns about the lack of resilience in Auckland's supply chain. New Zealand Refining fell 0.9 percent to $2.26. 

Meridian Energy fell 1.2 percent to $3.26, Contact Energy slipped 0.7 percent to $5.72, and Fletcher Building was down 0.4 percent at $4.72, all on larger volumes than normal. 

Fisher & Paykel Healthcare fell 9 cents to $12.38 after shedding rights to a 9.75 cents per share interim dividend. 

A2 Milk rose 2.4 percent to $11.02 on modest volumes, while Synlait Milk decreased 0.6 percent to $9.35 in light trading. 

Gentrack was the worst performer, down 2.87 percent at $5.30 and Sky Network Television declined 2.6 percent to $2.27, both on smaller volumes than usual. 

Outside the benchmark index, Hallenstein Glasson dropped 35 cents to $4.85 after shedding rights to a 24 cents per share dividend. Green Cross Health will shed rights to a 3.5 cents per share dividend on Monday, and was down 8 cents at $1.20 today. 

(BusinessDesk)

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