Market close: Solid gain for NZ shares after Fed buttons back on rate rise

The Warehouse Group gained 16c or 4.94 per cent to $3.40. Photo / Jason Oxenham

The United States Federal Reserve's economical interest rate rise triggered a new surge on Wall Street and a solid gain for the New Zealand sharemarket.

There was relief, that sprung around global markets, when the Fed overnight raised its cash rate 50 basis points to a range of 0.75 — 1 per cent, instead of increasing by 75 basis points. It was still the biggest increase since 2000.

The S&P/NZX 50 Index opened strongly but tapered off, finishing with an increase of 72.36 points or 0.62 per cent to 11,747.57 after reaching a morning high of 11,771.77.

Strangely, trading was still light with 35.12 million shares worth $105.42m. There were 89 gainers and 43 decliners on the main board.

Greg Smith, head of retail with Devon Funds Management, said the Federal Reserve provided a benign outcome and this produced positive sentiment, with the chair Jerome Powell saying a 75 basis points hike isn't on the table.

"Where the Fed goes, most others follow, and it calmed the farm about aggressive rate hikes going forward. The Fed indicated it can control inflation through modest rate tightening," Smith said.

He said one issue overhanging the local market was the Reserve Bank's Financial Stability Report which warned of steeper falls in house prices, by as much as 30 per cent and 10 per cent of mortgage holders — mainly those who have bought in the last two or three years — might experience negative equity.

On Wall Street, Dow Jones Industrial Average rose 2.81per cent to 34,061.06; S&P 500 increased 2.99 per cent to 4300.17; and Nasdaq Composite surged 3.19 per cent to 12,964.85. Up to April this year, S&P 500 fell more than 13 per cent — the worst four-month start to a year since 1939.

Across the Tasman, the S&P/ASX 200 Index was up 0.85 per cent to 7366.7 points at 6pm NZ time.

At home, Fisher and Paykel Healthcare gained 25c to $21.50; Ebos Group increased 50c to $42.38; Freightways picked up 12c to $12.01; Restaurant Brands rose 41c or 3.3 per cent to $12.84; and Synlait Milk collected 7c or 2.08 per cent to $3.44.

Pushpay Holdings rose 3c or 2.26 per cent to $1.36 as investors await details of the approaches and interest in buying the firm.

Briscoe Group rose 15c or 2.59 per cent to $5.95 after telling the market that first quarter sales increased 1.77 per cent to $176.2m compared with the previous corresponding period. Homeware was 2.3 per cent to $106.8m, and sporting goods sales increased 1.21 per cent to $69.4m. Briscoe is confident of protecting a large portion of its 633 basis points margin gain.

Other retailers benefitted from the solid performance. The Warehouse Group gained 16c or 4.94 per cent to $3.40; KMD Brands (formerly Kathmandu) was up 3c or 2.29 per cent to $1.34; and Michael Hill International improved 3c or 2.5 per cent to $1.23. But Hallenstein Glasson fell 20c or 3.3 per cent to $5.86.

Mercury, up 4.5c to $5.92, has completed its $250m capital bond offer including $50m over-subscriptions, with an interest rate of 5.73 per cent a year.

Manawa Energy, formerly Trustpower, increased 16c or 2.31 per cent to $7.10 on the first day of its new listed name following the sale of the retail business to Mercury.

Other energy companies Vector was up 6c to $4.40, and Genesis was down 4c to $2.78.

Retirement village operators Ryman Healthcare was up 11c to $8.97; Summerset Group Holdings was down 10c to $11.30; and Arvida Group declined 3c or 1.89 per cent to $1.56.

Property companies had a better day. Investore up 3c or 1.89 per cent to $1.62; Kiwi Property increased 2.5c or 2.44 per cent to $1.05; Property for Industry gained 5.5c or 2.16 per cent to $2.605; and Stride collected 3c to $1.88.

Other gainers were Serko increasing 10c or 2.04 per cent to $5; CDL Investments rising 5c or 4.81 per cent to $1.09; Eroad collecting 12c or 3.59 per cent to $3.46; and Rakon improving 4c or 2.42 per cent to $1.69.

Air New Zealand was down 5.5c or 6.32 per cent to 81.5c, mimicking the price of selling the shortfall of 274m shares from the rights offer at 81c. Shareholders who did not take up their entitlements will receive 28c a share — the premium from the offer price of 53c a share and the final sale price of 81c. Air New Zealand has completed its $1.2 billion capital raising.

ANZ Banking Group fell 70c or 2.3 per cent to $29.75, Port of Tauranga was down 12c or 1.88 per cent to $6.28; and ikeGPS declined 6c or 6.9 per cent to 81c.

DGL Group tumbled 10c or 2.41 per cent to $4.05 as controversy followed reported comments by founder Simon Henry about My Food Bag's Nadia Lim