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MARKET CLOSE: NZ shares rise as bargain hunters move on global relief rally

Monday 7th January 2019

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New Zealand shares rose as improving risk appetite in the wake of strong US jobs data and a note of caution from the US Federal Reserve sparked bargain-hunting in stocks like Kathmandu, Synlait Milk and A2 Milk. 

The S&P/NZX 50 index increased 62.28 points, or 0.7 percent, to 8,806.04. Within the index, 32 stocks gained, 11 fell and seven were unchanged. Turnover was low at $73.9 million. 

Stocks across Asia gained sharply after December jobs growth in the US was stronger than expected and after US Federal Reserve chair Jerome Powell said the Fed could be "patient" when assessing the need for more rate increases in 2019. Both factors helped ease concerns about a possible slowdown in global growth and the US economy in particular. The Dow Jones Industrial Average added 3.3 percent while the S&P 500 rose 3.4 percent and the Nasdaq ended 4.3 percent higher. 

"The strong positive lead from the US on Friday night has led to a big sigh of relief in markets today," said Forsyth Barr broker Suzanne Kinnaird. 

Asian share markets were also cheered after China's central bank announced an easing in policy on Friday, with 100 basis points of cuts to bank reserve requirements freeing up around $116 billion for new lending.

The strongest gainer was digital church collection payment operator Pushpay, which gained 8.5 percent to $3.20 on stronger than normal volume after it said it achieved its target of breaking even on a monthly cash flow basis prior to the end of 2018 and is confident it will now have positive cash flows on an ongoing basis. It also reiterated its full-year guidance. 

"It was obviously good for them," said Kinnaird. 

Kathmandu, which lost ground last week after it said the Christmas shopping period fell short of expectations, recovered on some bargain-hunting. The stock added 3.9 percent to $2.41. Volumes, however, were around a fifth of the average the past 90 days. 

Bargain hunters also turned to A2 Milk, which added 3.6 percent to $11.14 and Synlait Milk, which added 2.7 percent to $9.15. Kinnaird said both had "seen a lot of profit taking and weakness for no good reason other than weak markets."  Similar to Kathmandu, however, volumes remained light. 

Heartland Bank also fared better, rising 3 percent to $1.38.  The lender has been under pressure since the Reserve Bank said it will impose tougher capital requirements on licensed banks. 

In the other direction, Spark New Zealand eased 0.4 percent to $4.135. Electricity generator-retailer Meridian shed 1.4 percent to $3.45 on some profit-taking after it hit a record $3.50 Friday. Argosy Property shed 2.1 percent to $1.165.

Kinnaird said overall she is expecting markets to remain fairly quiet as people trickle back from their summer holidays during the next few weeks. She said investors will be watching for Christmas sales numbers from other retailers.

"Kathmandu's numbers weren't that wonderful, so whether that is reflected in the rest of the retail sector will be interesting,"  she said. 

Data earlier from Paymark, which accounts for more than 75 percent of the country's electronic transactions, showed December retail sales using electronic cards were relatively flat, rising 1.2 percent by value compared with the 5 percent growth shown in the preceding 11 months.

(BusinessDesk)

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