MARKET CLOSE: Stocks extend rally on global outlook

Tuesday 5th May 2009

Stocks extended their rally for the sixth day in seven as economic reports from Washington to Beijing stoked optimism the global slump is abating. Rakon, which makes components for global positioning systems, soared 14% to $1.50.

The NZX 50 Index rose 52.77, or 1.9%, to 2819.05, the highest close since Nov. 10. Within the index, 35 stocks rose, five fell and 10 were unchanged. Turnover was $113 million, marking it as one of the biggest days this year.

The market gains follow a rally on Wall Street that pushed the Standard & Poor’s 500 Index up 3.4% as better-than-expected home sales and construction spending stoked optimism the economic slump is abating. The S&P 500 topped 900 for the first time in four months. Chinese manufacturing grew for the first time in nine months, buoying prices of raw materials such as copper.

Sentiment towards the global economy has “improved markedly,” said Stephen Toplis, head of research at Bank of New Zealand. “Investors have become hopeful the dramatic policy measures taken worldwide are actually helping shore up the global economy.”

Fisher & Paykel Appliances climbed 9.8% to 56 cents, the highest since Feb. 20 and paring its slide this year to 62%. The appliance manufacturer gets about a quarter of its sales in US dollars and stands to benefit from any thawing of that nation’s housing sector.

The US National Association of Realtors said contracts to buy previously owned homes rose 3.2% in March, following a 2% gain in February. Commerce Department figures showed construction rose 0.3%, against expectations of a decline, helped by government construction projects.

Fletcher Building, which owns the Formica brand of laminated boards and sells roofing tiles and other building products in the US, gained 0.4% to $6.93, the highest since early October. Fletcher today said its $100 million share purchase plan closed oversubscribed today and would be scaled back. A top-up offer of $20 million wasn’t completely subscribed.

Nuplex Industries, which makes specialty chemicals and resins, climbed 5.7% to 37 cents and is down 69% this year.

Tap-maker Methven advanced 7.8% to $1.25 and carpet-maker Cavalier gained 6.1% to $1.75.

New Zealand Oil & Gas gained 3.6% to $1.44 after the price of crude oil held near a five-month high. NZX, the stock exchange operator, gained 4.6% to $7.51.

Businesswire.co.nz

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