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MARKET CLOSE: NZ shares bounce, buoyed by FBI clearing Clinton, led by Metro Glass and A2 Milk

Monday 7th November 2016

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New Zealand shares bounced off a four-month low, led upwards by Metro Performance Glass, A2 Milk Co and Z Energy, as part of an Asian market rally.

The S&P/NZX 50 Index gained 163.79 points, or 2.4 percent, to 6,872.26. Within the index, 46 stocks rose and five fell. Turnover was $147.2 million.

The local market has been sold off in the past month as foreign and domestic investors have sold heavily in the expectation that the low interest rate environment enjoyed by the market for some years is coming to an end, with the US Federal Reserve expected to raise interest rates this year. 

Metro Performance Glass was the best performer on the index, up 7 percent to $2.14, while A2 Milk Co gained 6.5 percent to $1.97 and Z Energy rose 4.6 percent to $7.72.

"We're seeing some evidence that the selling we've seen in the past few weeks has run its course for now," said Shane Solly, director at Harbour Asset Management. "Our market has seen a pretty big pullback - inflation's starting to rear its head, there's still things to get concerned about, but New Zealand has had a pretty aggressive sell-off and people are pausing now to see what the next few events might look like."

This morning local time, the US Federal Bureau of Investigation confirmed no criminal charges are warranted against Democratic presidential candidate Hillary Clinton. Global markets have become increasingly unsettled at the prospect of Clinton's rival, Donald Trump, succeeding in his bid for the White House since a letter from FBI director James Comey on Oct. 29 announced the FBI was reviewing emails found in the unrelated investigation into Anthony Weiner.

The Chicago Board Options Exchange Volatility Index, or VIX, known as Wall Street's fear gauge, rose to a five-month high at its last trade on Nov. 4. 

"There's no doubt the market has become very nervous about a Trump-Brexit-type event, and the anti-trade component that brings has created a lot of uncertainty," Solly said. 

Markets across Asia advanced following the news. At 5:20 local time, the Nikkei 400 was up 1.2 percent, the S&P/ASX 200 had gained 1.3 percent, and the Hang Seng rose 0.5 percent.

Westpac Banking Corp rose 2.6 percent to $32. The bank's New Zealand division posted a 4 percent fall in annual earnings as lenders give up margin in the hunt for mortgage customers.

SkyCity Entertainment Group advanced 1.4 percent to $3.67. New Zealand's dominant casino company, appointed Graeme Stephens as its new chief executive, replacing Nigel Morrison who resigned in April following an eight-year tenure.

Trade Me Group gained 1.1 percent to $4.52. The online auction site has bought $670,000 of shares in peer-to-peer lender Harmoney Corp to keep its stake at 14.4 percent. Institutional funders dominate Harmoney's funding, accounting for about $18 million last month compared to retail investors' at some $6 million.

Tilt Renewables was the worst performer on the index, down 2.4 percent to $2.05. The company, which split from Trustpower last month and operates wind and solar generation facilities, lifted first-half profit 1.7 percent as wind generation improved in both Australia and New Zealand

"It's very early days, there's some great long term opportunities but it has seen, as the demerger process has occurred, some people have decided Tilt is not for them," Solly said. "That's the process you quite often see when you see separation of vehicles - people decide if they do or don't want to be in them, and you see that separation anxiety."

Trustpower gained 0.4 percent to $4.81. It posted a 7.6 percent decline in first-half profit on a demerged basis, in the face of rising operating expenses and costs related to the split.

BusinessDesk.co.nz



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