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MARKET CLOSE: NZ shares gain as trade fears ease

Wednesday 9th January 2019

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New Zealand shares gained, supported by growing optimism that the US and China can reach a trade deal. A2 Milk benefited from the lift in sentiment. 

The S&P/NZX 50 index increased 126.07 points, or 1.4 percent, to 8,947.22. Within the index, 35 stocks gained, seven fell and eight were unchanged. Turnover was $91 million. 

Asian markets pushed higher after the US and China extended trade talks in Beijing for an unscheduled third day on Wednesday, amid signs of progress.  Australia's S&P/ASX was up 0.9 percent while Japan's Topix was up 1.4 percent and Hong Kong's Hang Seng was up 2.4 percent.

"Our market has a strong, firm tone with reasonable leads from offshore. It's a sea of green in Asia today and we are just part of it," said  Peter McIntyre, investment adviser at Craigs Investment Partners. "It's interesting there is still a shutdown in the US and that hasn't had a material impact on markets at all but the reduced trade tensions have certainly had a significant impact on markets."  

He noted, however, that volumes remain light in holiday-affected trading.  

A2 Milk added 3.7 percent to trade at $11.48, benefiting from the improved sentiment.

"It has become a key pick for brokers for 2019 as far as stock performance is concerned," said McIntyre. Trading  was light with only 548,970 shares changing hands versus a three month daily average of 1.36 million. 

Top gainers included Meridian Energy, which was up 2.6 percent at $3.59 and Mainfreight, which rose 2.0 percent to $31.40.  Trading in Meridian was relatively robust with 1.17 million shares trading versus its 90-day daily average of 1.58 million. It was the third most traded stock on the market.  Mainfreight only traded about 10 percent of its average volume. 

Spark made up around a quarter of the volume in today's market, gaining 0.5 percent to $4.15.

Ryman Healthcare added 4.2 percent to $11.35, but volumes were tepid. The stock remains well off last year's high of $14.09 and "some investors are saying enough is enough," said McIntyre.

Overall, he said buyers seem more confident about market valuations after a rough December and "they are starting to chip away and buy back in." 

Pushpay continued to gather support, lifting 2.5 percent to $3.30. Their latest update has "just confirmed to the market that their strategy is really working," he said.  Earlier this week, it said it is confident it will now have positive cash flows on an ongoing basis and reiterated its full-year guidance.

The Fonterra Shareholders Fund rose 1.3 percent to $4.77.  Fonterra announced it is selling its Farm Source division to Carrfields Livestock – a livestock agency provider - as it reviews all aspects of its business.

On the downside, Kathmandu fell 1.7 percent to $2.29, still reeling from a disappointing Christmas sales update that "sent some investors away disillusioned."  Around 51,000 shares were traded, versus a 90-day average of 238,826. 

Plexure Group rose 1.4 percent to $0.3650.  Earlier the company said it continued to comply with continuous disclosure after the NZX noted the share price was up more than 50 percent since Dec. 24. 

(BusinessDesk)

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