MARKET CLOSE: NZ shares rise on Fed restraint, local GDP growth; Auckland Airport slides

Thursday 21st March 2019

New Zealand shares rose after the US Federal Reserve signalled no rate rises there this year and local GDP data came in stronger than many economists had expected. Auckland International Airport extended its decline from a record, while also shedding rights to its interim dividend.

The S&P/NZX 50 Index rose 25.61 points, or 0.3 percent, to 9,461.31. Within the index, 19 stocks rose, 24 fell, and seven were unchanged. Turnover was light at $87.7 million.

Stock markets across Asia were mixed with Australia's S&P/200 index down 0.4 percent in afternoon trading, Hong Kong's Hang Seng rose 0.2 percent, and Singapore's Straits Times Index was barely changed.

Matt Goodson, managing director at Salt Funds Management, said bond yields "rallied hard" after the Fed's policy review, which reined in future rate hikes even further. While that would normally be a boon for equity markets, Goodson said the weaker growth outlook there has probably also "raised fears of what it means for corporate earnings."

The Fed lowered its 2019 growth outlook for the US economy to 2.1 percent from the 2.3 percent it was expecting in December.

Meridian Energy, the country's biggest power generator, led the market higher, up 2.9 percent at $3.995. The 643,000 shares traded were about half the daily volume of the past three months.

Air New Zealand was the biggest decliner, down 3.3 percent at $2.23. Almost 1.7 million shares changed hands, close to twice the recent average.

Auckland Airport fell 1.4 percent, or 11 cents, at $7.845. The country's biggest gateway closed at a record on Monday and has declined for the past three days. It shed rights to an 11 cent dividend today.

Goodson said the stock has been a very strong performer in recent weeks, despite slowing traffic growth, the profit warning from Air New Zealand, and a lower revenue stream from its regulated assets.

Fletcher Building fell 1.9 percent, or 9 cents, to $4.66 after shedding rights to an 8 cent dividend.

Spark New Zealand was the most traded stock on a volume of 5.9 million shares, close to the average volume during the past three months. It fell 0.6 percent to $3.54.

Of other stocks trading on volumes of more than a million shares, Sky Network Television declined 0.7 percent to $1.35. New chief executive Martin Stewart talked up his desire to offer streaming services in media interviews today and also acknowledged the need to retain broadcasting rights for sports.

Kiwi Property fell 0.3 percent to $1.445. The 1.08 million shares traded were a little below the recent average.

Synlait Milk posted the second biggest gain in the benchmark index today, up 2.8 percent at $10.02. The milk processor shed 14 percent yesterday after its first-half decline in earnings disappointed investors who'd been picking small growth. A2 Milk, which counts Synlait as a supplier, rose 0.7 percent to $13.72.

Fonterra Shareholders Fund units fell 1.6 percent to $4.20. Fonterra yesterday reported a return to first-half profit and signalled fundamental changes were on the cards in a strategic review of its business.

Outside the benchmark index, Michael Hill International fell 1.4 percent to 73 cents. Long-time shareholder Fisher Funds Management sold its stake in the jewellery chain yesterday, acknowledging the exit in a notice to the stock market today.

PGG Wrightson was unchanged at 51 cents. Its cornerstone shareholder Agria Corp and former chair Alan Lai were fined $220,000 and ordered to pay $30,000 in costs for breaching good character conditions imposed by the Overseas Investment Office.

(BusinessDesk)

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