NZ stocks: Equities maintain grip on big gains

Heavyweight Telecom hit its highest point since September yesterday as the market held on to Thursday's gains.

Telecom closed up 8c at $6.50 - from $5.79 a week ago - after languishing below $6 for most of the past seven months.

After beginning the day in negative territory, the NZSE-40 capital index ended up 0.72 points, or 0.03 per cent, at 2120.39 with healthy turnover of 37.56 million valued at $108.19 million.

The NZSE-40 piled on 2.5 per cent on Thursday following central bank interest rate cuts in the US and locally. For the week it put on 3.6 per cent.

David Cleal of JB Were said both Telecom and the wider market started weakly and gained ground during the day.

"The market again responded to a very solid performance overnight on Wall St," said Mr Cleal. "I think that the cut in interest rates from our Reserve Bank and the Fed has obviously spurred the market.

"Telecom has a relatively highly geared balance sheet at this point so it's probably a beneficiary [of rate cuts] but I think it's more ... the solid performance of the Dow.

"Stocks like Sky TV are starting to show signs of responding to a stronger kiwi dollar against the US - one thing that drove the stock down before was the US dollar.

"I think the stock's just moved up a bit in the past few days and that is in response to the move up against the US dollar, as their interest rates fall."

Sky TV, under chief executive John Fellet, rose 8c to $3.44 yesterday. Major owner INL rose 5c to $3.40.

Air New Zealand domestically held A shares were up 3c at $1.10, and the Bs gained 2c to $1.58, as the first of subsidiary Ansett's 10 grounded 767 planes took off in Australia yesterday.

Brierley Investments, which holds a large chunk of Air NZ, was up 1c at 65c.

Fletcher Building gained 9c to $2.35, Rubicon was up 1c at 47c, Tower rose 6c to $5.61 and Tranz Rail rose 4c to $3.74.

Other leading stocks were struck by profit takers. Those to lose some of Thursday's large gains included Contact Energy, down 6c at $2.97, Carter Holt Harvey, down 6c at $1.83, and The Warehouse, down 2c at $6.17.

'The market's certainly looking at cyclical stocks, it's looking 12 months out to some of these cyclicals performing better as economic activity increases again in response to lower interest rates," Mr Cleal said.

"So stocks like Carter Holt, Fletcher Forests and Building are showing evidence of being purchased for that reason."

- NZPA