KEY POINTS:
The sharemarket reacted to today's surprise Reserve Bank cash rate cut with a 2.7 per cent rise, its biggest percentage gain this year.
The benchmark NZSX-50 index, which yesterday rose 58 points (1.8 per cent), rose another 85.58 points to 3287.22 - the biggest gain since a 90 point rise on February 18.
Some brokers said the market could be at a turning point, after losing 25 per cent since October.
"It's clearly a reaction to the surprise cut in interest rates," Goldman Sachs JB Were analyst Marcus Curley said.
A number of export and currency-sensitive stocks, including Fisher & Paykel Healthcare, Sanford, Cavalier, Rakon, Air New Zealand, Fisher & Paykel Appliances and wine company Delegat's, jumped 4 to 5 per cent.
"Exporters are really benefiting from the consequential decline in the currency which has come off after the rates decision," Mr Curley said.
The New Zealand dollar fell over a cent to US74.30c.
Mr Curley said the market had pre-empted the decision when it rallied yesterday. But he added the decision had still been a surprise, particularly the dovish tone, with Reserve Bank governor Alan Bollard indicating more cuts ahead.
"People are obviously expecting a more rapid pace of interest rate cuts over the course of the next 12 months," Mr Curley said.
"That dovish tone is probably stimulating things more than the rate cut itself."
He said it could mark a turning point for the sharemarket.
"It's a pretty important day. Clearly, the Reserve Bank is recognising that it needs to get in behind GDP growth for New Zealand.
"With that philosophy, we can probably take some comfort in saying economic growth should bottom at some stage next year."
Forsyth Barr broker Brian Stewart said it was not yet clear the market had turned. Past recessions tended to drag on for 15 months and the current recession was approaching that length.
"This rally is probably a little early to say that we have bottomed at this stage, but obviously rate cuts are going to help sentiment.
"We are certainly approaching the bottom, whether it is... it is certainly encouraging. He said the market had been playing catch-up with Australian and other markets that had rallied strongly this week.
Had Telecom come to the party, today's rise would have been even greater. The market leader fell 3c to 347 and was among only five stocks to fall in the top 50.
No 3 stock Fletcher Building leapt 36c to 691, while No.2, Contact Energy, rose 33c to 847.
The were plenty of substantial gains - Rakon 16c to 275, Sanford, 18c to 538, Cavalier, 13c to 228, Mainfreight, 25c to 665, Sky City, 15c to 325, F&P Healthcare, 16c to 262, Infratil, 15c to 215, and Auckland Airport, 7c to 188.
NZX, which today reported its first half net profit rose 18 per cent, despite a sharp decline in the market during the six months, rose 35c to 735.
Among the few stocks to fall, juice company Charlies fell 7 per cent, or 1c, to 13c, and eftpos company ProvencoCadmus, fell 4.5 per cent, 1c to 21c.
- NZPA
