NZ stocks: Fletcher Building helps market fire after rate cut

The New Zealand sharemarket continued its climb today on moderate volume, with Fletcher Building the star performer after the central bank cut interest rates as expected.

The NZSX-50 gross index closed up 0.62 per cent, or 13.32 points, at 2163.25, while the top-40 index gained 0.59 per cent to 2096.27.

Topping turnover valued at $74.19 million was Telecom's $27.63 million, followed by Fletcher Building's $6.44 million.

Stephen Wright of ASB Securities said stocks rose across the board today in "quiet but firm" trading.

Fletcher Building closed at a five-year high of 395, up 13c or 3.4 per cent, after the Reserve Bank cut its official interest rate by the expected 25 points to 5.00 per cent today.

That was on top of a near-3 per cent rise in the stock yesterday.

"Over time people have said the economy is going to slow down and we're seeing a reasonably proactive stance taken by the Reserve Bank to minimise the slowdown of the economy. So this will help a cyclical stock like Fletcher Building," Mr Wright said.

Lower interest rates support the construction of new homes.

"It's always been a relatively cheap stock, and generally speaking undervalued. They've diversified and we've not seen the results of that Laminex buy, but by all accounts it's a very good buy," Mr Wright said.

Fletcher Building, which sells and makes building products, bought the Laminex wood panels business in Australia last year to take its Australian sales to 25 per cent of total revenue.

"It has done well, and it probably deserves to be up around the 400-mark."

Casino operator Sky City notched up another good rise today, up 5c to 925 to recover some of the ground lost since hitting a record high of 945 on July 1.

"It ... took a bit of a pounding, but it's still got a reasonable dividend yield, it's still got good growth. I think people keep underestimating how much a casino can make," Mr Wright said.

Both Fisher & Paykel stocks rose today, with Healthcare up 13c to 1175 and Appliances up 20c to 1320.

Buying in Tower and Tower rights was moderate, with rises of 2c to 121 and 1c to 28.5 respectively. There were 3.13 million Tower shares traded and 1.81 million rights.

Key Tower Shareholder GPG was up 2c at 157.

Telecom rose 2c to 520, ANZ was up 15c at 2020, Infratil gained 4c to 210, Tranz Rail rose 2c to 100, Westpac was up 25c to 1740, Sky TV gained 12c to 469, Baycorp Advantage was up 4c at 165, and Carter Holt Harvey rose 3c to 167.

On the other side, The Warehouse was down 3c at 480, Contact Energy shed 3c to 473, AMP lost 3c to 558, Trustpower was down 10c at 470, Nuplex lost 7c to 363, Independent Newspapers Ltd shed 2c to 414, and Briscoe Group lost 4c to 189.

There were 53 rises and 34 falls on the 130 stocks traded.

On Wall St, the Dow Jones closed up 35.79 points at 9194.24; the broader Standard & Poor's 500 Index rose 0.50 points to 988.61; and the Nasdaq Composite Index climbed 13.05 points to 1719.15.

- NZPA