Market Close: NZ shares join global rally on extra US Fed stimulus

View of Federal Reserve Bank of New York during COVID-19 pandemic. Photo / Getty Images

New Zealand shares joined a global rally as the US Federal Reserve's expanded bond buying programme fed investor optimism that central banks and legislators are doing everything they can to support the world economy.

The S&P/NZX 50 Index advanced 89.74 points, or 0.8 per cent, to 10,953.85. Within the index, 34 stocks rose, 11 fell, and five were unchanged. Turnover was $150 million.

Asian stock markets followed Wall Street higher as investors found confidence in the Fed's plan to buy corporate bonds in addition to the exchange-traded funds it already is purchasing. Stronger than expected Chinese economic data and an increased lending package from the Bank of Japan added to the upbeat sentiment.

Stephen Innes, chief global market strategist at AxiCorp, said investors were encouraged by the wall of central bank stimulus and had been "relentlessly pressing the buy button".

Australia's S&P/ASX 200 Index jumped 4.1 per cent, Hong Kong's Hang Seng rose 3 per cent, China's mainland indices each rose 0.9 per cent and Japan's Topix increased 3.8 per cent.

Rickey Ward, NZ equity manager at JBWere, said the stimulus supported confidence among local investors.

"The Fed turned the market around, it was pretty weak until they made their statement about buying the bonds," he said. "It provided the market a reason to go higher and all we've done is follow that better news."

The local market was led by the large dual-listed lenders. Australia & New Zealand Banking Group rose 4.5 per cent to $20.74 and Westpac Banking Corp rose 4 per cent to $19.53. Most trading in the Australian banks is on the ASX, with just 68,000 shares traded on the NZX in each stock.

Ward said the NZX was following its Australian counterpart on a smaller volume of trading.

A2 Milk, which is also dual listed on the ASX, rose 1.3 per cent to $18.95. Fisher & Paykel Healthcare decreased 0.2 per cent to $28.05.

Air New Zealand rose 3.2 per cent to $1.63, with 2.8 million shares traded. Ward said the airline had a big following from retail investors who are chasing the company's low share price.

"What shareholders are forgetting is that the government loan could convert to equity in which case your ownership dilutes very close to zero."

Auckland International Airport increased 1.1 per cent to $6.50 and Tourism Holdings declined 1.4 per cent to $2.20.

Gentrack advanced 3.3 per cent to $1.59, Vista Group International rose 3 per cent to $1.74 and Pushpay Holdings increased 1 per cent to $7.25.

Trustpower climbed 2.9 per cent to $7.20, Meridian Energy rose 2.1 per cent to $4.90 and Contact Energy increased 1.9 per cent to $6.35. Mercury NZ fell 2.1 per cent to $4.70, posting the day's biggest decline on the NZX 50.

Ward said the Electricity Authority's recent decision on transmission pricing helped provide certainty to the electricity market but hadn't answered the lingering question of whether the aluminium smelter at Tiwai Point would stay open.

"The whole energy sector has been a relative under-performer, despite the fact it offers a relatively attractive yield, because people are starting to question if the smelter will remain," he said.