New Zealand shares follow overseas markets higher

Spark's shares rose 2 per cent to $3.40. Picture / Greg Bowker

New Zealand shares rose for a fifth day, following overseas markets higher, led by Synlait Milk after the milk processor bought a plot in Waikato for a new manufacturing facility.

Spark New Zealand, Fletcher Building, and Air New Zealand all gained.

The S&P/NZX 50 Index increased 19.85 points, or 0.2 per cent, to 8,360.38. Within the index, 24 stocks rose, 15 fell, and 11 were unchanged. Turnover was $128 million.

Stocks across Asia followed Wall Street higher as investors around the world await testimony by Federal Reserve chair Jerome Powell for insights into the central bank's view on US interest rates. Investors have already pared back expectations for more aggressive hikes this year, making equity markets more attractive.

New Zealand's market is also nearing the end of what's been a positive corporate reporting season, with most companies meeting expectations, meaning the historical price-to-earnings ratio of 18.5 isn't stretched. That compares to Australia's S&P/ASX 200 index's PE of 16 and Wall Street's S&P 500 index's PE of 23.2.

"Overall it's been acceptable - continuous disclosure results mean you don't get too many surprises on historical results," said Grant Williamson, a director at Hamilton Hindin Greene in Christchurch.

"We're well off the highs for the day but are still trading higher, which is mainly in reaction to the offshore markets."

Synlait led the local bourse higher, gaining 3.3 per cent to $7.15 after the company said it bought a site in Pokeno where it planned to build a second drying facility, spreading its geographic supply base and expanding processing capacity to meet growing demand for infant formula.

A2 Milk Co, which has a long-running relationship with Synlait, gained 0.4 per cent to $13.10, while Fonterra Shareholders Fund units decreased 0.2 per cent to $6.07.

Spark rose 2 per cent to $3.395, Fletcher Building gained 1.5 per cent to $6.63 and Air NZ advanced 2.6 per cent to $3.17.

The dual-listed Australian banks gained, with Australia & New Zealand Banking Group up 1.2 per cent to $31.30 and Westpac Banking Corp rising 1.8 per cent to $33.76. Locally listed lender Heartland Bank was unchanged at $1.82.

New Zealand Refining rose 0.4 per cent to $2.39 after chief executive Sjoerd Post said he will leave the company at the end of July, ending five years in charge of the country's only refinery operator.

Transport fuels firm Z Energy fell 1 per cent to $7.13.

Mercury NZ slipped 0.3 per cent to $3.21 after the electricity generator-retailer reported record first-half earnings before interest, tax, depreciation and amortisation of $301m as favourable rainfall flooded its North Island hydro schemes.

Trustpower, which also has exposure to North Island hydro generation, gained 1.6 per cent to $5.20. South Island generator Meridian Energy fell 1.6 per cent to $2.805, while Contact Energy rose 0.2 per cent to $5.26. Genesis Energy rose 0.6 per cent to $2.35.

Vital Healthcare Property Trust gained 0.5 per cent to $2.10 after reporting a 2.7 per cent decline in first-half earnings as the hospital owner and developer's management fees rose on the company's biggest property portfolio.

Outside the benchmark index, PGG Wrightson was unchanged at 61c after first half earnings beat expectations, New Zealand Oil & Gas was unchanged at 68c in reporting a narrower first-half loss having overhauled its portfolio, while NZAX-listed Foley Family Wines was unchanged at $1.51 when the winemaker returned to first half profit on a 21 per cent gain in revenue.

Veritas Investments shares were unchanged at 5c after the food and beverage investor said it was considering a sale or merger of its profitable Better Bar Co unit when reporting first-half earnings.

Rakon was unchanged at 20c after saying it was in talks to buy out its senior partner in an Indian joint venture for US$5.5m ($7.6m), having written down the value of its investment in the entity last year.

Among companies reporting tomorrow, Precinct Properties was unchanged at $1.26, Scales Corp slipped 0.7 per cent to $4.54, Sky Network Television was unchanged at $2.80, Trade Me fell 1.4 per cent to $4.30, Vector rose 1.5 per cent to $3.30, Vista Group International gained 1.2 per cent to $2.55, and Wellington Drive Technologies gained 6.3 per cent to 17c.