Market close: NZ shares rise as low US rates boost demand for yield

Mainfreight led the market higher, up 2.8 per cent to $43.60. Photo / File

New Zealand stocks climbed as the US Federal Reserve affirmed its near-zero interest rate policy and continuing to make stocks paying reliable dividends attractive to investors.

The S&P/NZX 50 Index advanced 92.58 points, or 0.8 per cent, to 11,692.02. Within the index, 26 stocks rose, 17 fell, and seven were unchanged. Turnover was $107.6 million.

Investors digested positively the Fed's reiteration of its pledge to keep rates low for as long as necessary, holding the federal funds rate in a zero-to-0.25 per cent target range. The Fed also asserted it would keep pumping US$120 billion ($180.8b) a month into financial markets through its quantitative easing programme.

"Markets love low interest rates and we have seen that positive theme come into our market today," said Peter McIntyre, an investment adviser at Craigs Investment Partners.

"There was the old rule back in the GFC, 'don't bet against the Federal Reserve', and a lot of market participants are thinking there is no sign of interest rates rising any time soon."

However, trading volumes were light compared to highs seen during Covid lockdowns.

McIntyre said this indicated caution from some investors who were waiting to see if the upcoming domestic earnings season would validate the high share prices.

Mainfreight led the market higher, up 2.8 per cent to $43.60, after it told shareholders at its annual meeting this afternoon group revenue was up 8 per cent in the first 17 weeks of the current financial year, and pre-tax profit was up 20 per cent.

A2 Milk Co rose 2.7 per cent to $21.51.

Infrastructure investment firm Infratil gained 1.4 per cent at $4.83. McIntyre said the company was sensitive to low interest rates because investors saw it as an alternative source of long-term returns.

Other interest-rate sensitive stocks also gained: Contact Energy rose 2.5 per cent to $5.84, Meridian Energy was up 2.1 per cent at $4.79 and Spark New Zealand climbed 1.6 per cent to $4.92.

Kiwi Property Group rose 1.4 per cent to $1.07 after it indicated sales at its shopping centres had rebounded in the first full month of trading since lockdown, to be up 7.5 per cent compared to the previous June.

McIntyre said some of that bounce would be from pentup demand, but also money that would usually be spent on overseas travel during the winter months was being redirected into retail.

Auckland International Airport fell 1 per cent to $6.22 as investors weigh up the prospect of NZ's border staying closed for the rest of the year. The airport historically earned half its revenue from international travel.

"Those Covid numbers worldwide, but especially in Australia, don't hold a lot of hope for a reopening of borders anytime soon," McIntyre said.

Air New Zealand rose 0.4 per cent to $1.33.

Sky Network Television posted the biggest fall, dropping 2.9 per cent to 13.2 cents.

Outside of the benchmark index, carpet manufacturer Cavalier Corp rose 22 per cent to 39 cents.

IkeGPS Group rose 14.3 per cent to 88 cents after completing the institutional component of its $19.7m capital raising.

Plexure Group extended its gains, rising 12.1 per cent to $1.48. Yesterday it announced it was exploring moving its primary listing to the ASX.