MARKET CLOSE: Fletcher Building Jumps on MSCI Upweighting

Tuesday 14th April 2009

Stocks gained slightly on moderate volumes in a market that was just back from Easter and looking for direction. The NZX 50 Index rose 1.1% to 2599.82, on volume of $102.7 million, more than half of which was in Fletcher Building shares.

Fletcher Building had a strong run up, gaining almost 5.2% to close at $6.52 on volume of $52.47 million, following adjustment to the MCSI Index, which governs ratio holdings for numerous onshore and offshore fund managers and automatically triggers buyers for the stock.

"That's why you saw strong movement and good volumes in Fletcher Building," said Rickey Ward at Tyndall Investment Management. "Everywhere else, it felt like tough going."

Ward expressed surprise that the Air New Zealand share price appeared unaffected by announcements at Qantas of1750 job cuts and forecasts of a record second-half loss as freight and high value international traffic dry up in the global recession.

Qantas shares fell A$0.02 to A$1.94 on the announcement. Air NZ ended the day two cents up at 98 cents.

"That's a major downgrade for Qantas," said Ward. "To see Air New Zealand stronger doesn't quite add up."

Largest rise of the day was Skellerup Holdings, jumping 7.84% to 55 cents and F + P Appliances put on a similarly muscular burst, up 7.32% to 44 cents on negligible volume.

Retail sales figures issued this morning by Statistics New Zealand showed a seasonally adjusted monthly drop of 0.1% in February, once volatile automotive elements were excluded.

They showed reduced discretionary purchasing in areas such as accommodation and recreation, with the downturn in national shopping habits most marked in Auckland. Economists from three major banks today predicted a 50 basis point rate cut by April 30, bringing the Official Cash Rate to 2.5%.

A final floor of 2% is now widely expected for the OCR.

Methven was the biggest faller for the day, dropping 4.17% to $1.15. Contact Energy and Steel and Tube both shed 2.26% to close at $5.62 and $2.60 respectively.

Businesswire.co.nz

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