“The United States markets are at all-time highs after a softer-than-expected consumer price index and weaker retail sales. Bond yields went lower and equities had a better tone.
“Announcements from Fonterra and Kiwi Property fired up people’s imagination, and it doesn’t take much for the market to turn,” Solly said.
The US consumer price index increased 0.3 per cent in April, less than the 0.4 per cent estimate, and the annual inflation of 3.4 per cent was in line with expectations. Retail sales were flat in April, with economists expecting a 0.4 per cent lift.
The S&P 500 broke through 5300 points for the first time after gaining 1.17 per cent to 5308.15; Dow Jones Industrial Average was up 0.88 per cent to 39,908; and Nasdaq Composite increased 1.4 per cent to 16,742.39.
Fonterra Shareholders’ Fund was up 24c or 7.02 per cent to $3.66 after the dairy co-operative told the market it was looking to sell its global consumer (including Anchor, Mainland and Kapiti brands), Fonterra Oceania and Fonterra Sri Lanka businesses – all non-core assets.
Fonterra, which is terminating its on-market share buyback, wants to focus on being a business-to-business dairy nutrition provider, working closely with ingredients and foodservice customers to improve value. These divisions represented 93 per cent of milk solids sold and total revenue of $21.3 billion in the 2023 financial year.
Kiwi Property rose 3.5c or 4.35 per cent to 84c after announcing the conditional sale of the landmark Auckland Vero Centre to a Hong Kong conglomerate for $458m, a 1.9 per cent discount to the September valuation. The office building in Shortland St has returned Kiwi 11 per cent.
Solly said this was an important transaction for Kiwi as it could redeploy capital into higher-returning assets such as town centres. The market had also been wary about large office assets.
Fisher and Paykel Healthcare was up 51c or 1.79 per cent to $29.06; Ebos Group gained 38c to $35.13; Infratil increased 31c or 2.95 per cent to $10.81; Skellerup added 12c or 3.17 per cent to $3.90; Freightways collected 24c or 3 per cent to $8.24; and a2 Milk rose 35c or 5.13 per cent to a 14-month high of $7.17.
The energy sector had a strong day. Meridian was up 16c or 2.66 per cent to $6.17; Mercury gained 17c or 2.65 per cent to $6.59; Contact added 21c or 2.39 per cent to $9; Manawa increased 18c or 4.44 per cent to $4.23; and Vector improved 10c or 2.74 per cent to $3.75.
In the retirement sector, Ryman Healthcare rose 33c or 8.75 per cent to $4.10, and Oceania Healthcare was up 3c or 5.56 per cent to 57c. Solly said broker research had detailed improving cash flow in the sector.
In the retail sector, Briscoe Group which held its annual meeting was up 15c or 3.57 per cent to $4.35; and Hallenstein Glasson gained 13c or 2.48 per cent to $5.38.
Scales Corp increased 7c or 2.27 per cent to $3.15 after announcing a $47.5m deal to buy 240ha of apple orchards (including 126ha leased) from Hastings-based Bostock Group.
Scales is also buying the 50 per cent shareholding in Profruit (2006) which will become a wholly-owned subsidiary. At the same time, Mr Apple is selling the 186ha Blyth and Te Papa orchards to improve the brand’s margins.
Other gainers were ANZ Bank up 80c or 2.66 per cent to $30.90; Vulcan Steel rising 34c or 4.76 per cent to $7.49; Serko adding 17c or 5.59 per cent to $3.21; and PGG Wrightson improving 5c or 3.18 per cent to $1.62.
AFT Pharmaceuticals rose 18c or 6.77 per cent to $2.84; Property for Industry increased 6c or 2.75 per cent to $2.22; and Restaurant Brands was up 11c or 3.57 per cent to $3.19.
