Market close: Shares bounce back on hopes recession can be averted

KFC was one company that enjoyed a good day on the NZX. Photo / NZME

The New Zealand sharemarket put in a stellar performance, rising more than one per cent, with a bleak consumer confidence outlook counterbalanced by renewed hope that an economic recession will be avoided.

The S&P/NZX 50 Index traded strongly in the afternoon as the US futures pointed to a 400 points gain on the Dow Jones Industrial Average overnight. The local index increased 113.39 points or 1.07 per cent to 10,701.59 – the highest single-day rise in three weeks.

The index rose 1.46 per cent on May 31. There were 100 gainers and 40 decliners over the whole market on light volume of 31.29 million share transactions worth $119.34m.

The Westpac McDermott Miller Consumer Confidence Index dropped 13 points to 78.7 for the June quarter, the lowest level since the survey began in 1988. This showed that far more New Zealanders were pessimistic about the economic environment than those that were optimistic.

Household budgets, with rising mortgage rates and living costs, are being squeezed in a way that they haven't been for decades, said Westpac's chief economist Michael Gordon.

Central bank officials in Australia and United States, and even US President Joe Biden, indicated the economy will slow but a full-blown recession is not inevitable.

Greg Smith, head of retail with Devon Funds Management, said the market was dealing with mixed messages – consumer confidence painting a bleak picture but officials emphasising a recession is not a foregone conclusion.

"The market has been pricing in a recession but the jury is still out. Commodity prices have come off the boil and this has taken some heat out of inflation. There just isn't a consistent theme at the moment," Smith said.

The Australian S&P/ASX 200 Index had risen 1.25 per cent to 6514.1 points at 6pm NZ time.

At home, Fisher and Paykel Healthcare was up 13c to $19.61; Ebos Group increased 81c or 2.05 per cent to $40.25; Skellerup Holdings gained 17c or 3.85 per cent to $4.59; a2 Milk collected 15c or 3.25 per cent to $4.76; and Restaurant Brands rose 69c or 6.5 per cent to $11.30.

Auckland International Airport gained 8.5c to $7.27; Port of Tauranga was up 10c to $6.25; Serko increased 10c or 2.17 per cent to $3.65* and PGG Wrightson collected 12c or 2.72 per cent to $4.53.

ANZ Banking Group increased 62c or 2.62 per cent to $24.25; Westpac Banking Corporation gained 42c or 1.99 per cent to $21.57; and Heartland Group Holdings was up 4c or 2.09 per cent to $1.95.

Fletcher Building, which has 94 per cent of the plasterboard market, rose 17c or 3.64 per cent to $4.84 on trade worth $12.04 million, despite being the focus for the Gib shortage and supply crisis.

Building and Construction Minister Megan Woods has formed a taskforce to investigate the situation and has asked Fletcher to refrain from taking action if a competitor infringes their colour trademarks. The Commerce Commission will be releasing its report on factors affecting competition for key building materials.

Smith said there have been no signs that Fletcher is not producing as much Gib board as it can, and it all seems "a bit of a beat-up". The company has committed $300m in capital expenditure to a new Gib plant in Tauranga which will be commissioned next year.

Manawa Energy (formerly Trustpower), down 1c to $5.99, has lost its legal challenge against the Electricity Authority's new Transmission Pricing Methodology (TPM), which takes effect by April 1 next year.

Meridian, down 0.005c to $4.37, welcomed the authority's decision, saying the TPM followed a robust process. Mercury was up 6.5 to $5.41.

Contact Energy, which has a $1.5 billion medium-term geothermal development programme, is presenting an investment roadshow in Europe and London. Contact's share price increased 17c or 2.4 per cent to $7.24.

Move Logistics, which is starting a new domestic sea freight service, was up 5c or 4.72 per cent to $1.11.

Other gainers were Arvida Group up 5c or 3.52 per cent to $1.47; Marlin Global fund increasing 6c or 5.94 per cent to $1.07; and Tourism Holdings improving 7c or 3.08 per cent to $2.34.

Vital Healthcare Property Trust increased 6c or 2.28 per cent to $2.69; Vista Group gained 7c or 4.38per cent to $1.67; Accordant Group collected 4c or 2.35 per cent to $1.74; and DGL Group rose 17c or 6.56 per cent to $2.76.

Transport technology company Eroad was down 8c or 4.57 per cent to $1.67 on the day it confirmed Mark Heine as the new chief executive, after being the acting CEO for the past three months.

Other decliners were Ampol down $1.39 or 3.51 per cent to $38.26; The Colonial Motor Company decreasing 20c or 2.3 per cent to $8.50; Third Age Health Services shedding 7c or 2.53 per cent to $2.70; and My Food Bag falling 4c or 4.49 per cent to 85c.

- * Serko's closing price has been corrected