MARKET CLOSE: Stocks rally as global confidence thaws

Monday 4th May 2009

Stocks rose joining a rally in the Asia-Pacific region as signs of revival in economic growth in the U.S. and China lifted confidence in equity markets.

The NZX 50 Index rose 46.36, or 1.7%, to 2766.27, the biggest gain in 12 days. Within the index, 28 stocks rose, 10 fell and 12 were unchanged. Turnover was $70.9 million. Trading may be subdued this week, with Japan’s market closed until Thursday for Golden Week.

Shares edged higher on Wall Street after reports showed better-than-expected US consumer confidence and manufacturing. While a report from China showed a pick-up in manufacturing in China, helping lift prices of metals such as copper. Australia’s S&P/ASX 200 Index surged 3% to 3883. Hong Kong’s Hang Seng index soared 4.2%.

“We seeing a little bit of light – a general collection of evidence that’s coming through at the moment,” said Alan Moore, who helps manage $250 million at Milford Asset Management. “The longer we get these movements in markets keeping steady without any great hiccups, the more likelihood the market will start to get more confident again.”

Skellerup Holdings jumped 13% to 60 cents, leading the NZX 50 higher. Fisher & Paykel Appliances, which gained a reprieve but not a solution to its debt levels when banks extended its facility last week, rose 6.3% to 51 cents. NZ farming Systems Uruguay, which lowered its earnings forecast last week, gained 5.3% to 60 cents.

Telecom the biggest company on the NZX 50, jumped 4.2% to $2.74. The phone company will “vigorously resist the request for an injunction” from rival Vodafone, chief executive Paul Reynolds said. Vodafone on Friday said it had begun legal proceedings over interference to its customers from Telecom’s tests. The move by Vodafone comes just 13 days before Telecom is due to launch its so-called XT mobile network.

Freightways rose 0.7% to $2.94, trimming its decline this year to 8.8%. The courier and fast package delivery firm will reduce its forecast net debt to operating earnings for the year ending June 30 from 3.1 times to 2.4 times as the result of its $50 million capital raising, according to ABN Amro Craigs analyst Geoff Zame, the ShareChat website reported.

Government figures today showed the nation’s labour market weakened in the first quarter as the prolonged recession prompted companies to trim workers. Today’s report comes before the Household Labour Force Survey on Thursday, which is expected to show the unemployment rate climbed to 5.4% in the first quarter, the highest since March 2003.

The Household Labour Force Survey “will provide the rationale for some further easing from the RBNZ in coming months,” probably two cuts of 25 basis points apiece to a low of 2% for the official cash rate, said Robin Clements, chief economist at UBS New Zealand.

Central bank Governor Alan Bollard last week said interest rates will stay low through until the second half of 2010. That leaves short-term borrowing costs at relatively stimulatory levels and may help weigh on longer-term fixed rates, which have stayed stubbornly high.

Air New Zealand was the biggest decliner on the NZX 50 today, sliding 1.9% to $1.01.

Businesswire.co.nz

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