MARKET CLOSE: NZ shares hit record high for 7th day with Tower, Contact, Genesis gaining

Friday 11th March 2016

New Zealand shares hit a record high for a seventh straight session, though trading was quieter after yesterday's surprise interest rate cut by the Reserve Bank and volatility in international markets overnight. Tower, Contact Energy and Genesis Energy gained, while Trustpower fell.

The S&P/NZX 50 Index rose 7.1 points, or 0.1 percent, to 6,515.42. Within the index, 27 stocks rose, 20 fell and three were unchanged. Turnover was $153.9 million.

The index has gained 1.5 percent this week, and has closed at a record for seven consecutive trading sessions. Yesterday saw a 0.8 percent gain after Reserve Bank governor Graeme Wheeler cut the official cash rate a quarter-point to a record low 2.25 percent and hinted at a further cut, with the kiwi dollar's consequent tumble helping companies that earn most of their revenue offshore.

European and American stock markets were volatile and ended lower after the European Central Bank cut interest rates but president Mario Draghi suggested it was running out of room for further easing, even if other stimulus options remain. Asia's markets were mixed, with Japan's Nikkei 225 up 0.01 percent at 5:15 New Zealand time, while the S&P/ASX 200 rose 0.5 percent.

"Flows seem to be driving stocks more than new news," said James Lindsay, senior portfolio manager at Nikko Asset Management. "We've had a reasonable amount of news over the past three to four weeks, overseas there's been enough to keep people busy with Draghi and locally there was the Reserve Bank's announcement."

Tower led the local index, up 4 percent to $1.82, a one-month high.

Contact Energy rose 2.7 percent to $4.57. The stock had been held back by issues around earnings and competition, Lindsay said. In February, the electricity generator and retailer announced a $116 million net loss in the six months to Dec. 31, as it booked write downs of $257 million on its Otahuhu B power plant, which it closed last year, and a decision that its Taheke geothermal prospect is unlikely to be developed in the foreseeable future.

Genesis Energy gained 1.7 percent to $2.05, and Mainfreight climbed 1.6 percent to $16.10.

Warehouse Group advanced 1.4 percent to $2.85. The country's largest listed retailer beat its first-half profit forecast as investments over the past few years started to bear fruit, with profit adjusted for one-time items rising 22 percent to $45.6 million in the 26 weeks ended Jan. 31, above its forecast for $43 million to $45 million.

Warehouse expects full-year profit excluding one-time items of $61 million to $64 million, which would be up between 7-to-12 percent on last year, which Lindsay said was probably not much of a surprise to the market.

Steel & Tube Holdings advanced 1.4 percent to $2.26, Orion Health Group rose 1.3 percent to $3.04, and Trade Me Group climbed 1.2 percent to $4.35.

Trustpower was the worst performer, dropping 1.9 percent to $7.41.The Tauranga-based company is going ahead with plans to spin out its windfarms and renewable development pipeline into a separate business, and will put the demerger to a shareholder vote in July. One firm would hold its trans-Tasman windfarms and its wind and solar development projects, and the other would keep the remaining assets such as its hydro-generation and retail network under the Trustpower brand.

Air New Zealand fell 1.6 percent to $2.79. The airline will launch a revenue-sharing arrangement with United Airlines on its New Zealand-US routes, where the two carriers will promote and sell each others' services.

Z Energy dropped 1.4 percent to $6.50, Australia & New Zealand Banking Group shed 1.3 percent to $28.44, and Fonterra Shareholders' Fund dipped 1.2 percent to $5.61.

Outside the NZX 50, Trilogy International advanced 1.5 percent to $3.35. The skincare and home fragrance company, which was the top performer across the NZX All Index in 2015, raised its guidance for full-year sales and earnings, partly on the contribution from New Zealand cosmetics and fragrance distribution business CS Company which it acquired last August. Earnings before interest and tax are expected to exceed $14 million, the top end of its previous guidance.

NZAX-listed GeoOp shares fell 7.9 percent to 35 cents. The workforce management app developer narrowed its first-half loss as revenue nearly doubled, and said it's bought Australian mobile sales application developer InterfaceIT.

BusinessDesk.co.nz

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