NZ stocks: Shares power ahead despite rate rise

6.00pm

The sharemarket powered ahead today despite the Reserve Bank's widely anticipated rate rise and tough talk suggesting at least one, and possibly two, more rises this year.

"It hasn't dampened things down," said Goldman Sachs JBWere broker Murray Rutherford. "Clearly, it is a reflection that there are price pressures in the economy which is running at capacity and at full employment."

In the vanguard was Fletcher Building, which charged another 18c ahead today to a new record of 564. It rose 11c yesterday and 10c on Tuesday for a 7.7 per cent gain in three days.

"As people have assessed that the amount of infrastructure spend is likely to compensate for any drop-off that may happen in residential, that's been the core driver there," said Mr Rutherford. A road show by Fletcher Building this week reinforced the strong story the company has had to tell this year.

The Reserve Bank today confirmed that the long-anticipated slowdown has yet to eventuate, with growth in the March 2005 year predicted at 4 per cent.

Some of the Fletcher good news rubbed off on Carter Holt, which rose 4c to 234. Both companies may benefit from the receivership of home improvement chain The Building Depot. The shares of its owner RetailX were suspended on the Alternative Exchange.

The benchmark NZSX-50 gross index closed up 10.38 points at 2751.13 while the NZSX-All capital index added 4.10 points at 916.87.

Fisher & Paykel Healthcare rose 15c to 1365 after it announced the launch of two new products for use on the treatment of sleep apnea.

Unrelated Fisher & Paykel Appliances, which has taken something of a battering in the past month since its result, continued its recovery today with a 10c bounce to 420.

Tower gained 8c to 203 on news that it has snuck into the ASX-200 index. Australian institutions are likely to have to buy the stock.

Air New Zealand recovered 2c to 190 after taking a 6c dive yesterday as investors unloaded to scramble into the Qantas bookbuild in the wake of British Airways' decision to quit.

Dampening the party was lead stock Telecom, which fell back 4c to 568, having made a 7c recovery yesterday from recent weakness.

Lion Nathan dropped 18c to 742. There were rumours it has finally lost patience with its Chinese unit, having earlier written tens of millions off on its investment.

The Warehouse, under pressure this week as anxiety about the Briscoe result and fear that US warehouse-style retailer Costco Wholesale Corp may enter Australia next year, rebounded 5c to 443 today. The company is due to announce its result tomorrow and that would dicate direction, said Mr Rutherford.

ABN Amro's Cameron Stewart said if Costco entered Australia it could be the final straw for The Warehouse in Australia.

Powerco was unchanged at 207, after Prime Infrastructure said yesterday it would not sweeten its 215cps takeover deal for Powerco. Ports of Auckland, now on day two of a planned four-day strike, closed 4c up at 695.

NZX recovered 10c to 820, being sold over the past few days after discount sharebroker Access Brokerage was placed in liquidation.

Sanford continued to fall today, down 5c to 405, on the back of an 18c drop yesterday. The fishing company has been in the news this week after it lost a crewman in a gruesome accident.

Other top 50 stocks on the move today included: Contact Energy up 2c at 587, Sky Network TV up 6c at 531, Michael Hill Jeweller up 10c at 710, Westpac NZ, down 15c to 1750, Baycorp Advantage, down 7c to 343 and Promina, down 14c to 473.

The small stocks index rose 33.96 points to 7610.47 and the top 10 index rose 5.71 to 1105.08.

Despite its weakness, Telecom continued to dominate turnover with $40.1m of the market's $98.5m turnover.

There was good volume in F&P Appliances with $7.4m, Fletcher Building, $5.8m, and Tenon, $5m.

In all, there were 53 stocks up and 38 down by the close among 136 traded.

- NZPA