NZ shares rise as utilities buoy market

New Zealand shares rose for a second day despite a weak lead from Wall Street. Photo / File

New Zealand shares rose for a second day despite a weak lead from Wall Street. Utilities led the local market higher as the prospect of low interest rates for longer made companies paying reliable dividends more attractive.

The S&P/NZX 50 Index gained 71.47 points, or 0.6 per cent, to 11,417.78. Within the index, 18 stocks rose, 28 fell, and four were unchanged. Turnover was $242.8 million.

David Price, a broker at Forysth Barr, said low long-term interest rates supported demand for equities offering reliable returns. He was less upbeat about how much support another rate cut by the Reserve Bank would provide to the economy, and, in turn, corporate earnings.

"The Reserve Bank decision is irrelevant. We are already at 1 per cent; there are no bullets left," he said. "There is a dark cloud coming and there is no sense in firing a pop gun at it."

US share markets fell overnight after the Federal Reserve announced an emergency rate cut of 50 basis points. While the S&P 500 was up 0.5 per cent before the announcement, it closed 2.8 per cent lower. The other indices also fell, with the Dow Jones Industrial Average falling 2.9 per cent and the Nasdaq down 3 per cent.

Stocks across Asia were marginally stronger and the NZX50 scraped out a gain as utilities and blue-chip stocks pulled the market into positive territory. That was in spite of the majority of stocks declining.

Telecommunications infrastructure provider Chorus led the market higher for a second day, gaining 4 per cent at $7.355 on a volume of 1 million shares.

Trustpower rose 3.5 per cent to $6.60, Mercury NZ rose 3.2 per cent to $4.80, Infratil increased 2.5 per cent to $5.28, Contact Energy gained 2.4 per cent to $6.75, Vector rose 1.9 per cent to $3.30 and Genesis Energy climbed 1.8 per cent to $3.125. Meridian Energy held at $4.81.

Contact, which is working with Meridian Energy to try and keep the aluminium smelter at Tiwai Point viable, today urged the Electricity Authority to move quickly on a revision to allow for a discount on the price of electricity transmission.

Fisher & Paykel Healthcare rose 2.5 per cent to $26.60 on a volume of 1.2 million shares.

The company has previously said it had increased demand from China related to the virus outbreak. However, Price noted the company had also "hosed down" suggestions that the virus was having a significant impact on profits as affected regions only make up a small fraction of the company's earnings.

A2 Milk rose 2.1 per cent to $16.95, continuing to perform strongly despite the potential headwinds from the outbreak.

Price said investors were buoyed by the company's strong report last week, where it indicated an intention to expand manufacturing.

Travel stocks remained under pressure. Air New Zealand fell 2.1 per cent to $2.115 and Auckland International Airport declined 1.4 per cent to $7.74. Tourism Holdings – which has said it is more exposed to European tourism than Asian, therefore less effect by travel restrictions – gained 2 per cent to $2.55.

Sky Network Television posted the big loss of the day, falling 7.3 per cent to 51 cents. Kathmandu Holdings followed, dropping 4.5 per cent to $2.96.

Among other stocks trading on volumes of more than a million shares, Spark New Zealand fell 0.6 per cent to $4.77, Oceania Healthcare declined 2.7 per cent to $1.09, Kiwi Property Group gained 1.4 per cent to $1.445, Precinct Properties New Zealand increased 0.3 per cent to $1.905, Z Energy decreased 0.2 per cent to $4.22, Metlifecare held at $6.88, Goodman Property Trust fell 0.2 per cent to $2.33 and Heartland Group declined 1.8 per cent to $1.62.