MARKET CLOSE: NZX 50 gains as Wall Street rebounds; Wrightson up

Thursday 22nd January 2009

New Zealand shares rose, lifting the NZX 50 Index to its biggest gain in almost two weeks, as optimism President Barack Obama will announce plans to revive growth and free up credit helped banks to rebound.

The NZX 50 rose 29.37, or 1.1%, to 2734.41. Within the index, 25 stocks rose, 15 fell and 10 were unchanged. Turnover was NZ$78.4 million, according to Reuters data. Rural services company PGG Wrightson climbed 6.1% to NZ$1.22, leading the index higher, having slumped 19% in the past week.

Westpac Banking Corp. rose 3.5% to NZ$19.25 on the NZX, following a rebound in U.S. financial, led by a 21% jump in Citigroup and a 23% advance by Bank of America.

The two U.S. lenders led the Dow Jones Industrial Average up 2.9%, recovering from the worst Inauguration Day stock slump in history amid disappointment that Obama’s speech didn’t contain more concrete economic measures. Shares rallied overnight after U.S. Treasury Secretary elect Timothy Geithner said Obama would produce “a comprehensive plan to help stabilize the core of the financial system.”

Fletcher Building, which owns the U.S.-based Formica laminates business, rose about 2% to NZ$5.75. The stock has dropped about 4% this month. The company today said it completed the sale of NZ$100 million of 5- and 7-year notes paying 9% interest.

Goodman Fielder rose 4.7% to NZ$2. Its shares are the biggest gainers on the NZX 50 this year, rising 21%. Freightways climbed 3.7% to NZ$2.80. Rakon dropped 1.8% to NZ$1.08 and is the biggest decliner on the benchmark so far this year, falling 13%. NZX Ltd. fell 2% to NZ$4.90.

Investors have had a mixed bag of data and news the past few days about the state of the local economy and markets. Manufacturing activity remained in contraction in December on dwindling production and fewer new orders. The Bank of New Zealand-Business NZ Performance of Manufacturing Index rose to 42.5 last month from a record low in the previous month.

Consumer spending on credit and debit cards fell 0.5% in December, after a record drop in November, according to government figures. The card figures are an early indicator of retail sales in the latest month after spending was unexpectedly little changed in November. Ex-auto card spending rose 0.2%.

Meantime Contact Energy, the largest utility on the NZX 50 and a stock typically classed as defensive, surprised investors this week by announcing full-year profit may fall as much as 23% as hydro dams in the South Island spill water, the Tiwai Point aluminium smelter reduces output and gas costs rise.

Contact shares gained 2.4% to NZ$6.76 today, having erased 78 cents, or about NZ$450 million from its market value in the past two days.

“Some analysts are a wee bit cautious on the stock going forward,” said Alan Moore, who helps manage about NZ$250 million at Milford Asset Management.

“Quite a few companies are fairly attractive – what we don’t know is how sustainable that it,” Moore said.

“The market will be waiting to absorb the earnings season,” he said. “I would be surprised if many CEOs will be coming out and saying we’re going to have a really good year ahead.”

A possible exception is Fisher & Paykel Healthcare, he said. The company derives about 80% of its revenue in U.S. dollars and benefits when the kiwi currency slides. Its breathing masks and respirators are meeting growing demand in markets such as the U.S., where conditions such as sleep apnea are being linked to illnesses including heart disease. The shares fell 0.3% to NZ$3.16 today.

New Zealand Farming Systems Uruguay fell 3.2% to 60 cents. The company developing dairy farms in South America using intensive New Zealand farming techniques, failed to raise capital last year to expand. It now has to deal with a slump in world prices for dairy products which spurred the European Union to revive export subsidies for its farmers.

In Sydney, the S&P/ASX 200 Index rose 1.3% to 3486.8 as Finance Minister Lindsay Tanner said the government was in talks with banks to establish a crisis fund to help companies meet their debt obligations. Tanner said details on the fund will be announced soon.

Shares of Wesfarmers Ltd., Australia’s second-biggest retailer, were halted pending its plans to raise A$2.8 billion selling shares at a discount to repay debt taken on with its 2007 acquisition of Coles Group. Woolworths Ltd., the nation’s largest retailer, rose 1.1% to A$26.08.

Newcrest Mining fell 4.7% to A$31.50 after Australia’s largest gold mining company said second-quarter mining costs surged 82% as output fell and the price of copper declined.

National Australia Bank, the nation’s largest lender, rose 1.9% to A$17.95 after Finance Minister Tanner’s comments on a fund to lend directly to companies.

In Tokyo, the Nikkei 225 Index rose 1.1% to 7988.22 after the Bank of Japan kept interest rates on hold and said it expects the world’s second largest economy to contract.
Toyota Motor fell 4.2% after government figures showed Japan’s exports dropped 35% in December,

(Businesswire.co.nz)

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Last updated: 22/01/2009 5:09pm

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