MARKET CLOSE: NZX 50 gains a 4th day; Cavalier, Fletcher up

Wednesday 18th March 2009

Shares rose for a fourth day, with the NZX 50 Index posting its biggest gain in almost two weeks, amid speculation prices now reflect the global economic slump and have more room to recover.

The NZX 50 rose 41.603, or 1.6%, to 2606.326 at the 5 p.m. close of trading, the biggest jump since March 4. Within the index, 25 stocks rose, 15 fell and 10 were unchanged. Turnover was NZ$83.5 million.

The gains follow a rally on Wall Street, pushing the Dow Jones Industrial Average up 2.5% after government figures showed a jump in housing starts last month, boosting companies exposed to the property sector including Home Depot. Bank stocks also rallied, having gained since some of the world's biggest lenders reported a profitable start to the year.

Carpet maker Cavalier led the NZX 50 higher, surging 17% to NZ$1.80 on light volume. NZ Farming Systems Uruguay jumped 8.3% to 65 cents, its third daily gain since the company gained a credit rating to raise funds in South America, the first step to restarting its dairy conversion programme.

Fletcher Building rose 6% to NZ$6.05, helped by the U.S. housing data, bringing its surge in the past 10 days to about 18%. Australian rival Boral rose 2.6% to A$3.17 on the ASX.

"It's pretty hard to argue that stock prices will go lower," said Barry Lindsay, research manager at First NZ Capital. "They have discounted the grim economic situation which currently exists."

The stock market may revive six-to-12 months before any upturn in economic indicators and investors should expect more volatility linked to corporate and economic news, he said.

In New Zealand today, Prime Minister John Key said the economy will emerge from the global downturn in better shape than many countries because its banking and housing sectors are in better shape, while the weakening kiwi dollar is helping exporters.

The next phase of the tax cuts kick in on April 1 and the government has upped spending on infrastructure projects to help underpin the economy.

"These tough times could be a springboard for much better times ahead," Key told a Council of Trade Unions productivity conference in Wellington.

Skellerup Holdings rose 7% to 60 cents and Rakon Ltd. climbed 4.9% to NZ$1.28.

Opus International Consultants, a global engineering consulting firm, jumped 13% to NZ$1.35 after announcing it would cut the workforce at its unprofitable U.K. unit by a fifth to 285 as it tries to halt losses and adjust to a market downturn.

PGG Wrightson rose 3.8% to NZ$1.1 and Contact Energy rose 3.3% to NZ$5.94.

Fisher & Paykel Appliances dropped 8.7% to 42 cents, the biggest decline on the NZX 50 today, amid concern Nuplex's efforts to raise capital are proving harder than expected and the appliance manufacturer may face similar problems if it taps investors for more funds to shore up its balance sheet.

Westpac Banking rose 2.7% to NZ$22.28, joining financials across Asia amid signs of better times ahead for banks. Mizuho Financial Group climbed 1.5% on the Nikkei 225 Index after the Bank of Japan said it will buy government bonds from banks to revive lending. HSBC Holdings rose 5% on the Hang Seng in Hong Kong after saying trading last month matched its estimates.

The Nikkei 225 Index gained 0.2% to 7963.36 in early afternoon trading. Australia's S&P/ASX 200 Index fell 0.4% to 3442.4. Rio Tinto's Australian shares fell 8.8% to A$47.41 amid concern its plans to sell assets to China's Chinalco to repay debt will falter.

Businesswire.co.nz

Comments from our readers

No comments yet