Buoyant day for sharemarket as GDP slumps - Market close

Channel Infrastructure, which owns Marsden Point, was down 5c or 3.33 per cent to $1.45. Photo / Tania Whyte

The New Zealand sharemarket reached its highest level in 14 weeks on a buoyant day that saw the Dow Jones Industrial Average hit an all-time peak and wholesale interest rates fall significantly.

The S&P/NZX 50 Index rose strongly at lunchtime and had a late dip before closing at 11,552.88, up 77.11 points or 0.67 per cent – matching the 11,554.48 set on August 31. The index’s intraday high was 11,593.22 points.

There were 79 gainers and 58 decliners over the whole market on increased volumes of 92.23 million shares totalling $207.47 million.

Channel Infrastructure, down 5c or 3.33 per cent to $1.45, topped the turnover list with 54.48 million shares worth $73.63m after Mobil Oil NZ offloaded 53.76 million shares and reduced its shareholding to 14.19 per cent, from 17.2 per cent.

The market shrugged off further evidence of the slowing economy when gross domestic product (GDP) fell 0.3 per cent in the September quarter - economists expected slight growth of 0.2 per cent. Per capita, GDP was down 0.9 per cent, and technically the country is in a recession.

Jeremy Sullivan, investment adviser with Hamilton Hindin Greene, said: “If you strip out the current high net migration, the economy contracted 3 per cent over the last year.

“The downward revision of GDP reduces the chance of interest rate rises and increases the possibility of a cut by the end of next year,” he said.

Sullivan said wholesale interest rates were down by 5-6 per cent. The NZ 10-Year Government Bond yield was trading at 4.578 per cent, down 22.4 basis points.

In the United States, the markets are looking forward to three cuts next year after the Federal Reserve held its official rate steady at 5.25-5.5 per cent and softened its monetary policy approach.

The Fed also signalled further cuts in 2025 with the rate reaching 3.5-3.75 per cent, and it is forecasting inflation of 2.4 per cent next year.

The Dow surged past 37,000 points for the first time, rising 512 points or 1.4 per cent to 37,090.24. The S&P 500 increased 1.37 per cent to 4707.09 points and the Nasdaq Composite was up 1.38 per cent to 14,733.96 – but they are not quite at their peaks.

Fisher and Paykel Healthcare was up 90c or 3.77 per cent to $24.75; Mercury Energy rose 24c or 3.9 per cent to $6.39; Summerset Group gained 21c or 2.23 per cent to $9.62; Mainfreight collected 97c to $68.30; and Briscoe Group added 12c or 2.92 per cent to $4.58.

There was plenty of corporate activity at home. Chorus was up 18.5c or 2.41 per cent to $7.855 after receiving a favourable pricing review from the Commerce Commission.

Ebos Group was up 70c or 1.99 per cent to $35.91. Ebos this time knocked back Australian media speculation, saying it was not in discussions with Paragon Care regarding a potential transaction. Paragon distributes medical equipment and consumables in the Australian and New Zealand healthcare markets, like Ebos.

Vista Group increased 5c or 3.7 per cent to $1.40 after telling the market that Southeast Asian cinema chain Major Cineplex has signed up for its Vista Cloud technology for three years. Cineplex has 182 sites in Thailand, Cambodia and Laos.

Fletcher Building, up 12c or 2.62 per cent to $4.70, announced Gareth O’Reilly as the chief executive of its Australian division. He starts his new role in February after being chief executive of Schneider Electric’s Pacific division.

Retirement village operator Arvida Group, up 7c or 7.61 per cent to 99c, has rejected a takeover approach from an offshore infrastructure fund, saying the highly conditional offer of $1.70 a share undervalued Arvida’s intrinsic value and was not in the best interests of shareholders. Arvida’s net tangible assets are $2 a share.

Heartland Group declined 3c or 1.88 per cent to $1.57 after downgrading its full-year net profit to $93m-$97m, from the previous $116m-$122m. Heartland said it was having a slower-than-expected start to the financial year because of a fall in new car sales and adverse Australian weather affecting livestock purchases. However, reverse mortgages were growing.

Other decliners were Auckland International Airport, down 19c or 2.2 per cent to $8.44; Genesis Energy, decreasing 6.5c or 2.57 per cent to $2.465; Tourism Holdings, shedding 7c or 1.93 per cent to $3.55; and Colonial Motor Co, falling 45c or 5.11 per cent to $8.35.