NZX50 joins rally across Asia; Contact paces power sector gains

New Zealand’s S&P/NZX 50 index joined the global rally as stock markets across Asia followed Wall Street higher amid growing expectations the US Federal Reserve will cut its key interest rate this month, which will include governor Lisa Cook after she was given a reprieve on her ouster by the courts.

Contact Energy, and its relatively new shareholder Infratil, paced gains across energy stocks, which buoyed the local market, tracking similar gains overseas as oil giants such as Chevron and Exxon Mobil followed Brent crude prices higher.

Meanwhile, Briscoe Group dipped after confirming it faced skinnier gross margins in the tough environment that was the first half, while remaining cautious about the second half, which is yet to see a return in consumer confidence.

And Pacific Edge climbed 13% after the bladder cancer detection firm got a higher price recommendation on its Cxbladder Triage Plus product by the US Centers for Medicare and Medicaid Services.

Follow the leader

The NZX50 rose 22.51 points, or 0.2%, to 13,276.24, with 20 stocks gaining, 21 declining and nine unchanged. Turnover was $150.6 million across the main board, of which Fisher & Paykel Healthcare accounted for $26.8 million as it rose 0.3% to $37.70.

The local bourse followed other markets higher after Wall Street’s main indices all set records overnight ahead of US producer and consumer inflation data that are seen as the final hurdles to the Federal Reserve cutting the federal funds rate later this month.

Meanwhile, Fed governor Lisa Cook will keep her job for now after a federal judge granted Cook’s request for a temporary court order to keep her seat on the board for now, ruling US President Donald Trump’s attempt to fire her will probably fail because Cook’s termination didn’t comply with the law.

Asian markets joined the rally, with Australia’s S&P/ASX 200 index up 0.3% in late trading, while Singapore’s Straits Times Index rose 1.1% and Japan’s Nikkei 225 index gained 0.8%.

The kiwi dollar traded at 59.47 US cents at 5.30pm from 59.50 cents yesterday.

Energy companies paced gains on the local bourse, with Contact Energy rising 2.4% to $9.35, Mercury NZ up 1.5% at $6.84 and Meridian Energy advancing 0.5% to $5.78. Infratil, which is a shareholder of Contact, gained2.1% to $12.45.

Scales Corp led the benchmark index higher, up 5.6% at $5.45.

Meanwhile, Mainfreight posted the biggest decline on the day, down 5.9% at $60.25, while Oceania Healthcare slipped 3.5% and Ebos Group was down 2.5% at $29.23, its lowest level in more than four years.

Confidence game

Briscoe declined 0.9% to $5.64 after reporting a 12% decline in first half net profit to $29.3 million on a 0.2% dip in revenue to $371.3 million, with sales picking up in the second quarter. Gross margins remain under pressure and the retailer said annual profit will probably be around $60 million if consumer confidence doesn’t improve.

Among companies shedding rights to upcoming dividend payments, Summerset Group Holdings declined 2.8%, or 31 cents, to $10.80 ahead of its 11.3 cents per share return, while Goodman Property Trust slipped 0.5%, or 1 cent, to $2.17 after giving up rights to its 1.7 cents per unit dividend.

Spark New Zealand was the most heavily traded stock on a volume of 3.5 million, ending the session unchanged at $2.50.

Outside the benchmark, PGG Wrightson was unchanged at $2.43 after shedding rights to a 4 cent dividend, Solutions Dynamics fell 5.4%, or 4 cents, to 70 cents ahead of its 3 cent dividend, and the Private Land and Property Fund slipped 0.3%, or 0.4 of a cent, to $1.33 after giving up rights to a 0.7 cents per unit return.

Pacific Edge surged 13% to 15.6 cents after US CMS gave a higher recommended price on the bladder cancer detection firm’s Cxbladder Triage Plus product, although it’s yet to be on the reimbursement list for the organisations overseeing the Obamacare affordable health insurance scheme.

And Vital dipped 3.8% to 38.5 cents in light trading as Tait International closes in on its 90% takeover threshold, securing 81% ahead of the Sept 12 closing date.

Reporting by Paul McBeth. Image from Curious News.