Market close: Investors take comfort in fears of a banking crisis alleviating

KMD Brands increased 2c or 2.02 per cent to $1.01 after reporting a 352 per cent rise in net profit of $13.97m on revenue of $547.92m, up 34.5 per cent, for the six months ending January. Photo / NZME

A more confident New Zealand sharemarket posted a half per cent gain on the comfort of record first half earnings from retailer KMD Brands and a feeling that the offshore banking crisis is under control.

The S&P/NZX 50 Index had a late surge in the last half hour matching session and closed near the day’s high at 11,586.93, up 55.63 points or 0.48 per cent.

There were 74 gainers and 57 decliners over the whole market on improved volume of 35.18 million shares worth $131.77 million. Auckland International Airport, up 6c to $8.88, dominated the individual trading with $37.76m worth of its shares changing hands.

Greg Smith, head of retail with Devon Funds Management, said the markets were more confident that officials have a handle on the banking crisis and that it won’t disintegrate into something more serious.

“There have been lots of relief measures put in place in Europe and the United States, and Treasury Secretary Janet Yellen indicated the US government was prepared to take further action to safeguard bank deposits, with a backstop for smaller banks if needed.”

One of the regional banks in the firing line, First Republic, rose 30 per cent after its share price fell 47 per cent the day before.

Smith said overnight the US Federal Reserve is expected to step down to a 25 basis points increase in interest rates and it will have to communicate some message around the banking situation.

“If Fed pauses the rate rises, then that may do more harm than good because it would suggest they are somewhat nervous about the banking sector.”

Smith said the minutes of the last Reserve Bank of Australia (RBA) meeting signalled they were near the end of the monetary tightening process, and they would reconsider the case for a pause in rate hikes at their next meeting.

“The RBA appreciates there is a lag effect with rate increases, particularly with mortgages, and it will be interesting to see if we get any of the same sentiment from the Reserve Bank.”

Wall Street had a relief rally, with Dow Jones Industrial Average up 0.98 per cent to 32,560.6 points; S&P 500 gaining 1.3 per cent to 4002.87; and Nasdaq Composite increasing 1.58 per cent to 11,860.11 and up 13.32 per cent so far this year.

Apple, gaining 22 per cent this year, and Microsoft, up 13 per cent, now make up more than 13 per cent of the S&P 500. Tesla increased 7.82 per cent to US$197.58 ($318.68) after Moody’s rating agency upgraded the company from its junk-rated credit.

Across the Tasman, the S&P/ASX 200 Index was up 0.9 per cent to 7018.1 points at 6pm NZ time.

At home, KMD Brands increased 2c or 2.02 per cent to $1.01 after reporting a 352 per cent rise in net profit of $13.97m on revenue of $547.92m, up 34.5 per cent, for the six months ending January. It is paying an interim dividend of 3c a share on June 30.

KMD told the market the positive first half momentum continued through February with group sales up 31.9 per cent compared with the same month last year.

For the first half, gross margin increased 100 basis points to 58.7 per cent, and Rip Curl sales rose 18.8 per cent to $306.4m, Kathmandu’s up 51 per cent to $194m, and Oboz’s gaining 124 per cent to $47.5m.

Smith said KMD produced an impressive result, helped by the return of international travel and tourists buying surf wear as they get back to places like Hawaii and Queensland. Increasing the gross margins in the face of cost inflation was also impressive.

The Warehouse Group, which indicated in December that trading was a bit weaker, is the next to report its annual result and its share price was up 5c or 2.13 per cent to $2.40.

Fellow retailers Briscoe Group, which went ex-dividend, was down 8c to $4.56, Michael Hill declined 2c or 1.87 per cent to $1.05; and Hallenstein Glasson was up 4c to $5.39.

The local market was driven higher by Ebos Group, up $1.23 or 2.77 per cent to $45.70; and Fisher and Paykel Healthcare gaining 60c or 2.39 per cent to $25.75.

Ventia Services increased 13c or 5.06 per cent to $2.70; Restaurant Brands rose 30c or 4.84 per cent to $6.50; Turners Automotive gained 6c or 1.8 per cent to $3.40; and Air New Zealand was up 1.5c or 1.99 per cent to 77c.

NZME gained 3c or 3 per cent to $1.03; Rakon increased 4c or 4.44 per cent to 94c; Smartpay Holdings added 6c or 5.26 per cent to $1.20; and My Food Bag was up 2c or 8.89 per cent to 24.5c.

Mercury Energy declined 6c to $6.08; Freightways was down 7c to $9.33; Synlait Milk tumbled a further 8c or 3.17 per cent to $2.44; Summerset Group drifted 15c to $8.65; and Arvida Group decreased 3c or 3.09 per cent to 94c.

Scales Corp, also ex-dividend, was down 6.5c or 2.19 per cent to $2.90; Serko fell 13c or 5.58 per cent to $2.20; Sanford declined 8c or 1.96 per cent to $4; Napier Port decreased 9c or 3.41 per cent to $2.55; and NZ Oil & Gas was down 1.5c or 3.75 per cent to 38.5c.