Stocks rise as TPP deal sparks optimism

SkyCity shares were up 3.1 per cent yesterday to close at $3.94. Photo / Getty Images

Investors adopt a 'risk-on' attitude as trade pact is finalised and amid speculation US will keep interest rates low.

New Zealand shares rose yesterday after agreement was reached on the Trans-Pacific Partnership deal. Xero, SkyCity Entertainment Group and Fletcher Building gained.

The S&P/NZX 50 Index rose 37.57 points, or 0.7 per cent, to 5668.11. Within the index, 30 stocks rose, 11 fell or nine were unchanged. Turnover was $113 million.

Twelve Pacific Rim nations have reached a deal on the Trans-Pacific Partnership (TPP), which covers 40 per cent of the global economy, ending more than five years of negotiations. It is the largest trade and investment pact since the Uruguay Round of the General Agreement on Tariffs and Trade 20 years ago. Investors took the sealing of the deal as a confidence boost, and adopted a risk-on attitude.

Xero, the cloud-based accounting software firm, gained 2 per cent to $15.30. The company is forgoing profit to fund its United States push where it hopes to capture the small-to-medium-sized business market.

"A bit more risk-on trading seems to be what we're seeing today," said James Smalley, director at Hamilton Hindin Greene.

"The market's been worried about economic growth and maybe with that TPP deal sentiment has turned to a positive again," Smalley said.

"People are more risk-on looking for bargains than protecting capital type scenarios," he said.

"Xero is the bellwether for how the market is feeling."

Adding to investors' confidence, weaker data in the United States raised speculation the Federal Reserve will keep interest rates lower for longer.

"It was ironically weaker-than-expected job data in the US that maybe pushed out rates cuts and the market gets excited," Smalley said.

"Investors are looking for some beaten down stocks, for example Fletcher Building - well that was at three-and-a-half-year lows before. It's definitely a bit of bargain hunting coming out of the woodwork."

SkyCity led the benchmark index higher advancing 3.1 per cent to $3.94 having declined 9.4 per cent over the past three months. Fletcher, the construction and building supplies firm, climbed 2.9 per cent to $7.20 but has dropped 14 per cent in six months.

Units in Fonterra Shareholders' Fund, which give holders access to Fonterra Cooperative Group's dividend stream, declined 1.1 per cent to $5.22. The fund shed rights to its final 15c per share dividend yesterday.

Orion Health Group rose 0.6 per cent to $3.46, paring an intraday jump of 9 per cent after the healthcare system software developer said it was part of a group that won a United States Department of defence contract to help modernise its healthcare data system.

Contact Energy, the energy generator and retailer, was the worst performer on the benchmark, down 1.8 per cent to $4.86. Mighty River Power declined 1.2 per cent to $2.49.

Outside the benchmark index, Mercer Group climbed 18 per cent to 6c. The stainless steel fabricator and manufacturer has agreed to sell its unprofitable medical division for $2.03 million, kicking off an asset sale programme signalled in August when the company wrote off $6 million from the value of goodwill, assets and inventory.