Index rises to highest level since March

Air New Zealand shares were up 2.1 per cent yesterday to close at $2.86.

Investment in property and blue-chip stocks boosts NZX 50 despite predictions of global interest rate hikes.

New Zealand shares rose yesterday as investors shrugged off the prospect of higher global interest rates, and bought property stocks, including Argosy Property and Property For Industry, and blue-chip companies such as Auckland International Airport that typically offer high dividends.

The NZX 50 Index gained 17.91 points, or 0.3 per cent, to 5885.81 - the highest close since March 18. Within the index, 26 stocks increased, 18 fell and six were unchanged. Turnover was a lighter-than-usual $71.7 million with Australian markets closed for the Queen's Birthday holiday.

Global investors are expecting the Federal Reserve will start raising interest rates in September after US non-farm payrolls showed the world's biggest economy added 280,000 jobs last month - a bigger gain than expected.

Stocks on Wall Street fell as the prospect of US interest rates moving away from zero pushed up bond yields.

Listed property companies paced the benchmark index's gains with Property For Industry advancing 2 per cent to $1.56. Argosy Property rose 0.9 per cent to $1.13 and Vital Healthcare Property Trust gained 0.6 per cent to $1.66. Auckland Airport climbed 1.6 per cent to $5.01. Spark New Zealand increased 0.7 per cent to $2.91 and Fletcher Building advanced 0.7 per cent to $8.50.

"The market is expensive on most traditional metrics, but compared to bond yields, it has been fairer value," said Matt Goodson, who helps manage $700 million of Australasian equities at Salt Funds Management. "The only risk with that is that bond yields are low, inflation is really low, so are you going to get the same earnings growth you're used to? Possibly not."

Goodson said US data may signal a change in that long-running global theme with the Fed on the cusp of potential tightening.

National carrier Air New Zealand led the index higher, rising 2.1 per cent to $2.86. Contact Energy was the biggest decliner on the day, falling 8.4 per cent, or 51c, to $5.57, after shedding rights to a 50c per share special dividend to be paid on June 23.

Pacific Edge, the cancer diagnostics test developer, fell 3.1 per cent to 62c, still a premium to the 61c per share price the company plans to sell shares at in a $35.3 million capital raising which opens on Friday.

Goodman Property Trust was unchanged at $1.17 after the property investor announced plans for four new industrial developments were in the pipeline, and launched a $100 million bond offer.

Outside the benchmark index, Scales Corp rose 0.6 per cent to $1.74 after the horticulture exporter told shareholders at its annual meeting it expects earnings to meet prospectus guidance. Children's clothing retailer Pumpkin Patch slumped 12 per cent to 22c, extending a decline from Friday when it abandoned plans to refinance or find a buyer, and said it will focus on improving its business.

Green Cross Health, formerly known as PharmacyBrands, was unchanged at $2.50 after shedding rights to a 3.5c per share dividend, payable on June 19. Synlait Milk fell 2.9 per cent to $2.65 after the dairy products processor cut 10c from the forecast milk payout this season. Units in the Fonterra Shareholders' Fund slipped 0.6 per cent to $4.72.