“Cyclical companies’ earnings have fallen in the weak economy and it takes time for the interest rate reductions to kick in. The market looks ripe for a rally and today the bigger stocks led the way as they have more liquidity and are easier to get in and out of.
“We have got the right mix of conditions for a turning point in activity and earnings. The OCR cut can only add fuel to the [economic] recovery,” Solly said.
The Business NZ Purchasing Managers Index was at 51.4 for January, up from 45.9 in the previous month, and the first time in two years it has gone into positive territory.
Solly said the index is a leading indicator to show the New Zealand economy is recovering.
Market heavyweights Fisher and Paykel Healthcare increased 68c or 1.94% to $35.78; Contact Energy added 10c to $9.39; a2 Milk gained 8c to $6.58; Spark was up 4c to $2.90; and Fletcher Building collected 10c or 3.25% to $3.18.
Skellerup was up 8c to $5.25 following its record half-year financial result; Freightways gained 18c to $10.98; Winton Land increased 4c or 2.21% to $1.85; and My Food Bag improved 1c or 5.13% to 20.5c.
Blackpearl Group added a further 10c or 11.63% to 96c and has risen nearly 40% in two trading days, while Synlait Milk was up 2c or 2.67% to 77c, an increase of 22.5% in four trading days.
Other gainers were NZME up 2c or 1.92% to $1.06; ikeGPS increasing 2c or 2.5% to 82c; Smartpay improving 2c or 3.96% to 52.5c; and General Capital adding 2.5c or 8.62% to 31.5c.
Vector declined 12c or 2.94% to $3.96; Manawa eased 10c or 1.85% to $5.30; Ebos Group was down 40c to $41.80; Goodman Property Trust decreased 4c or 1.92% to $2.045; and Scott Technology shed 9c or 4.13% to $2.09.
AFT Pharmaceuticals declined 7c or 2.51% to $2.72; Eroad was down 3c or 2.75% to $1.06; T&G Global decreased 3c or 1.84% to $1.60; and 2 Cheap Cars shed 2c or 2.6% to 75c.
Meridian Energy, up 5c to $6.05, said in its latest operating report that last month was the second driest January on record, the fourth driest in the Waiau region and driest in the Waitaki.
For the month to February 10, national hydro storage decreased from 114% to 91% of the historical average. South Island storage was 88% of the average and North Island 117%.
National electricity demand in January was 5.7% lower than the same month last year, and retail sales volumes were down 6.7%.
Solly said the continuing dry conditions are a headwind for Meridian but wholesale electricity prices are holding up for longer.
Sky TV, up 3c to $2.55, told the market that testing on a new satellite has had positive early results and the migration is on track for early April. The new satellite is successfully positioned at 160 degrees east, the same position as the existing D2 satellite.
Sky TV provides its latest financial result this coming Friday and said it will report on the successful implementation of an additional Sky Box feature that eliminates rain fade.
Property For Industry, unchanged at $2.14, is paying $8.5m for a 5600sq m site at 316 Neilson St, Auckland, to add to five other properties along the same road in Penrose, having a combined value of $80.8m. The company will end up with a 5-7ha estate zoned heavy industrial in one of Auckland’s key precincts.
