Market close: Stocks edge higher despite weak offshore markets

The NZX 50 index closed slightly higher on Friday.

The New Zealand sharemarket brushed off a weak lead from offshore markets and ended the day a smidgen higher on a strong volume driven by index rebalancing.

The S&P NZX 50 Index closed up 1.21 points, or 0.01 per cent, at 12,497.35.

There were 56 gainers and 77 decliners on the main board where 128 million shares were traded worth $525.76m.

Local investors appeared to concentrate on domestic news rather than international events that drove US markets lower on Thursday night.

US stocks fell as Treasury yields resumed their march higher despite the Federal Reserve telegraphing interest rates would remain at their current near-zero levels through at least 2023.

Fed chair Jerome Powell reiterated that the central bank would keep monetary policy loose until more data confirms the US economy was back on track.

Sam Tretheway of Milford Asset Management said the offshore equity markets largely ignored those comments and and global interest rates continued to increase.

"That provided a pretty weak lead for our market today. The Nasdaq was off three per cent, S&P 500 down one and a half overnight. So we did hold up reasonably well in that context especially given how sensitive our market is to the movement in interest rates.

"We have been a massive beneficiary of low interest rates given roughly half our market are stocks that have a pretty strong correlation with downward movements."

Local investors have been considering further discussion in the media and comments made by ministers around the likelihood of a transtasman bubble and whether that is reflected or not in share prices yet," Tretheway said.

An announcement on a two-way bubble could come as early as Monday after several states in Australia have allowed quarantine-free entry for much of the past six months.

"We did see Auckland Airport and Air New Zealand up strongly on Thursday. But the airport gave a fair bit of that back on Friday," Tretheway said.

Auckland International Airport shares closed down 19c, or 2.45 per cent, to $7.57.

"For Auckland Airport reopening a transtasman bubble would remove the balance sheet risk maybe facing them if we were to stay as a closed economy for another year … it relieves the debt pressure for that stock."

Air New Zealand gained 3c, or 1.66 per cent, to $1.84. Investors are expecting an announcement soon from the airline on a capital restructure as it looks to raise cash and repay a $900m Government loan as part of the Covid-19 support package.

The market was also dissecting this week's GDP figure which showed the economy shrank 1 per cent in the December quarter.

That led to Fitch Solutions revising its forecasts for New Zealand growth. "We have revised down our forecast for NZ's economy to grow by 3.6 per cent in 2021 compared to 4.5 per cent previously," the analytics division of Fitch said.

Elsewhere on the market, energy stocks were mostly up for the day with Mercury climbing in late trading to close up 30c, or 4.8 per cent, to $6.55. Meridian was up 5c, or 0.9 per cent, at $5.51 and Contact Energy closed up 14c, or 2.05 per cent, to $6.97.

However, Genesis Energy fell 15c, or 4.17 per cent, to $3.45 and Trustpower fell 12c, or 1.58 per cent, to $8.11. Infrastructure and technology investor Infratil slipped 26c, or 3.54 per cent, to $7.09.

Cinema software firm Vista Group International fell 5c, or 2.27 per cent, to $2.15 after yesterday's 8.4 per cent gain.