Asian stock markets rallied as investors start betting the US Federal Reserve will have to cut interest rates after its surprising weak jobs data last week, with New Zealand’s S&P/NZX 50 index joining in the day’s gains.
Blue-chip companies Fisher & Paykel Healthcare, Infratil, Ebos Group and Mainfreight drove the index higher, while KMD Brands surged from its record low to lead the local proceedings.
Meanwhile, the stock market operator NZX was the most heavily traded stock on the day, admittedly with one trade accounting for the bulk of that.
And Briscoe Group came off the boil after Forsyth Barr analysts trimmed their target price on the retailer as its margins remain under pressure.
Turn around
The NZX 50 jumped 193 points, or 1.5%, to 12,877.04, with 31 stocks gaining, 11 declining, and eight unchanged. Turnover was $106.5 million.
Stocks across Asia rallied, following the recovery on Wall Street as investors flocked to snap up cheap deals, with growing expectations the US Federal Reserve will have to cut its key rate after the dismal employment figures last week.
The kiwi dollar traded at 58.98 US cents at 5pm in Auckland from 59.13 cents yesterday, with two-year swap rates down 4 basis points at 3.06%.
The S&P/ASX 200 index was up 1.1% in late trading, while Singapore’s Straits Times Index rose 0.4% and Japan’s Nikkei 225 index climbed 0.7%. India’s Nifty 50 was one of the few bourses to decline, falling 0.4% ahead of the Reserve Bank of India rate decision tomorrow, which is expected to keep the key rate at 5.5%.
New Zealand’s index heavyweights drove the day’s gains, with F&P Healthcare advancing 3.2% to $36.94, Infratil climbing 4.2% to $11.90, Ebos gaining 3% to $41.24 and Mainfreight rising 2.4% to $61.50.
Retailer KMD Brands led the NZX50 higher, jumping 6.4% to 25 cents as it climbed off Monday’s record low.
Tourism Holdings rose for another day, up 4.4% at $2.15 after Forsyth Barr analysts raised their price target 35 cents to $3. The rental campervan operator’s board this week rejected what they called an opportunistic bid from the Trouchet family and BGH Capital.
Off track?
Gentrack extended its decline, posting the biggest fall on the day as it dropped 3.4% to $9.78. The utilities software firm has been on the backfoot after losing contracts to Octopus Energy’s Kraken Technologies, which may get spun out as a standalone business.
Briscoe Group fell 1.8% to $5.90 after Forsyth Barr analysts cut 5 cents from their target price on the retailer to $4.85 and retained an ‘underperform’ rating, saying the homeware and sporting goods chains’ gross margins remain under pressure and that its valuations are out of whack with the operations.
“This has been index-flow driven following Briscoe's inclusion in the NZX 50 with no fundamental support for current valuation levels,” analysts Paul Laxton Koraua and Rohan Koreman-Smit said in a note to clients. “In our view, the risk earnings is skewed to the downside, rather than the upside, as margin pressure continues and IKEA is opening before Christmas.”
NZX was the most heavily traded stock with a volume of almost 2 million shares, with one trade accounting for 1.7 million of that, changing hands at $1.50 a share, the price the stock market operator ended the day on.
Outside the benchmark index, NZ Rural Land Co climbed 4.3% to 97 cents after saying it’s reviewing its capital structure with the share price not reflecting the progress the company has made.
Allied Farmers, which owns the management contract for the rural landlord, gained 2.6% to 80 cents.
Asset Plus fell 4.4% to 21.5 cents after the company declared a first-quarter dividend of 0.2 cents per share, and retained the quarterly review of distributions as it works to fully lease its final property before looking to sell it.
Reporting by Paul McBeth. Image from Curious News.
