A fall in government bond yields has spurred the New Zealand sharemarket to newly found gains this week – with dividend-paying stocks benefiting.
The S&P/NZX 50 Index had a strong trading day, albeit on low volume, in the lead-up to the Matariki holiday weekend, closing at 10,813.92 – up 135.25 points or 1.27 per cent.
The index gained more than 2 per cent during the shortened week, and has now fallen 18 per cent so far this year.
There were 87 gainers and 55 decliners over the whole market, with 27.02 million shares worth $109.62 million changing hands.
The New Zealand 10-year Government bond yield dropped 16 basis points to 3.976 per cent after reaching 4.3 per cent a week ago. The five-year bond yield was down slightly to 3.808 per cent.
Greg Main, Jarden Wealth Management adviser, said "we've seen bond yields dip, and the oil price (US$103.55 a barrel) come off. Broadly speaking, this has helped yield-type stocks and created a bit of a bounce.
"With fears of an economic slowdown or recession, maybe interest rates won't go up as much. And Fonterra's latest lift in the milk payout has to be positive for the New Zealand economy," Main said.
Fonterra this week increased its 2022/23 price range to $8.75-$10.25 per kg of milk solids, up from $8.25-$9.75 per kg. The forecast lifts the midpoint payout by 50 cents to $9.50 per kg.
Overnight, Wall Street suffered small losses. Testifying before the US Congress, Federal Reserve chair Jerome Powell said while a recession was a possibility, the economy was coming from a position of strength with a robust labour market and rising demand.
In the UK inflation hit a 40-year high of 9.1 per cent. The US is at 8.6 per cent and New Zealand's 6.9 per cent.
At home, dividend-paying energy stocks Contact was up 25c or 3.57 per cent to $7.25; Genesis increased 10c or 3.95 per cent to $2.63; and Meridian gained 5c to $4.42.
Infratil increased 14c or 1.85 per cent to $7.70, and Chorus rose 25c or 3.57 per cent to $7.25.
Property stocks Investore gained 5c or 3.31 per cent to $1.56; Precinct Properties was up 2.5c or 1.89 per cent to $1.35; and Argosy increased 2c to $1.205.
Spark, another dividend stock, was up 3c to $4.78. There is talk that five parties have been shortlisted for a majority stake in the company's towers business, worth about $1 billion.
Market leader Fisher and Paykel Healthcare kept the market honest, rising 53c or 2.76 per cent to $19.73 on trade of $24.9m, making up a fifth of the day's volume.
Skellerup Holdings made a further recovery, up 12c or 2.48 per cent to $4.96; a2 Milk rose 9c or 1.95 per cent to $4.71; Mainfreight collected $1.01 to $68.80; and Port of Tauranga gained 9c to $6.28.
The retirement village operators had a better day. Ryman Healthcare gained 20c or 2.27 per cent to $9; Summerset Group Holdings increased 15c to $9.55; and Arvida Group was up 3c or 2.05 per cent to $1.49.
Oceania Healthcare, up 2c or 2.13 per cent to 96c, told shareholders at its annual meeting that its 2023 financial year was off to a good start, with sales volumes, average capital gain and resale margins all ahead of the first two months of last year. Oceania expects to return excess cashflow from first-time sales on all new developments.
Other gainers were Pushpay Holdings, rising 7c or 5.65 per cent to $1.31; Scales Corporation up 10c or 2.22 per cent to $4.60; Tower increasing 1.5c or 2.33 per cent to 66c; and Chatham Rock Phosphate collecting 6c or 18.46 per cent to 38.5c.
New Zealand King Salmon Investment, which had a recent rights issue to strengthen its balance sheet, was up 1.5c or 7.69 per cent to 21c.
Fast-food operator Restaurant Brands was down 24c or 2.17 per cent to $10.80; Synlait Milk declined 6c or 1.86 per cent to $4.93; Vista Group decreased 5c or 2.99 per cent to $1.62, Ventia Services Group shed 6c or 2.31 per cent to $2.54; and AFT Pharmaceuticals was down 9c or 2.41 per cent to $3.65.
Sanford, down 4c to $4.16, made an investor presentation that highlighted a five-year target of restoring the pre-Covid operating profit (ebit) of $65m and then $85m-$105m for the remainder of the period. Sanford wants to increase mussel operating profit from 2 per cent to 28 per cent by 2026.
Medicinal cannabis company Greenfern Industries increased 0.006c or 4.84 per cent to 13c after obtaining the globally-recognised Good Agriculture and Collection Practice certification for its cultivation facility based in Taranaki.