Market close: NZX perks up after Reserve Bank's monetary policy

Reserve Bank Governor Adrian Orr. Photo / File

The Reserve Bank provided the New Zealand sharemarket with a pick-me-up after it confirmed that it will continue to spur the economic recovery from the Covid-19 crisis.

The S&P/NZX 50 Index found a new gear after the latest central bank monetary policy report, climbing 95.40 points or 0.82 per cent to 11,704.62 after reaching an intraday low of 11,609.22. Trading was solid with 59.75 million shares worth $228.69 million changing hands, and there were 65 gainers and 64 decliners over the whole market.

Jeremy Sullivan, investment adviser with Hamilton Hindin Greene, said the market had been sold off before the Reserve Bank announcement and "I do think it added some confidence to the trading. The bank is prepared to add support to the economy and the market recovered after that."

The Reserve Bank kept the official cash rate unchanged at 0.25 per cent, and is continuing its quantitative easing or bond buying programme with another $100 billion of Government and Inflation-Indexed and Local Government Funding Agency Bonds by June 2022. The bank is aiming to inject money into the economy and to lower borrowing costs to households and businesses.

The NZ dollar had also fallen before the Reserve Bank announcement and perked up again, rising from 65.96c against the US dollar to 66.13c and reached a high during the day of 66.49c.

The market heavyweights got back on track, Fisher and Paykel Healthcare gaining 18c to $32.60 on trade worth $46m, and a2 Milk climbing 61c or 3.46 per cent to $18.26 on trade worth $12.3m.

Pushpay Holdings, which organises online payments for churches, mainly in the United States, had an upgrade from several brokers and rose 45c or 5.81 per cent to $8.20, after reaching a high of $9.40 on July 2.

Other movers were Auckland International Airport, up $20c or 2.88 per cent to $7.14; Briscoe, increasing 9c or 2.30 to $4.00; Port of Tauranga, gaining 13c to $7.40; and Turners Automotive Group, up 15c or 6.38 per cent to $2.50.

Sullivan said the car market was a little bit dubious during the lockdown, but Turners is saying the outlook is now better than expected. It is also paying one of the market's highest full-year dividends at 17c a share, fully imputed, producing an 8 per cent yield.

Network operator Chorus lost further ground, falling 8c to $8.58 and Synlait Milk was down 16c or 2.64 per cent to $5.89.

Outdoor clothing and equipment retailer Kathmandu, which took over Rip Curl, disappointed with its full-year result and its share price was down 7c or 5.47 per cent to $1.21. Kathmandu reported a near 86 per cent fall in net profit of $8.14m, from $57.63m because of the Covid disruption and store closures during lockdown. It had an $18m one-off transaction cost and $4.6m in restructuring costs.

Kathmandu's revenue for the 12 months ending July grew 48.7 per cent to $801.5m, with nine months of trading from Rip Curl. It is not paying a final dividend

Overnight, Wall Street also had a pick-me-up. The Dow Jones Industrial Average was up 0.52 per cent to 27,288.18, the S&P 500 Index gained 1.05 per cent to 3315.57, and the Nasdaq Composite increased 1.71 per cent to 10,963.64.

Across the Tasman, it was a strong day on the Australian stock exchange, with the S&P/ASX 200 Index climbing 130.5 points or 2.26 per cent to 5914.6 at 5.45pm. The markets have suddenly got bullish again but for how long in this uncertain Covid world?