Beaten down stocks rally as investors seek out winners and losers in expected rate cuts - Market close

Air New Zealand continued to perk up, gaining 2.5c or 4.31% to 60.5c. Photo / Dean Purcell

The New Zealand sharemarket continued to push higher, with the rally taking place over a broad range of stocks, especially amongst those that have been beaten down.

The S&P/NZX 50 Index had another strong afternoon trading session and closed at 12,530.99, up 105.4 points or 0.85%, after reaching a morning low of 12,383.31.

The index has now risen more than 16% since its low of 10,741.57 points on October 30 last year and has gained 6.4% so far this year.

There were 87 gainers and 53 decliners over the whole market on volumes of 69.22 million share transactions worth $195.2 million.

Shane Solly, portfolio manager with Harbour Asset Management, said there was a better tone to the market and investors were starting to get excited about interest rate cuts, whether they come first from the US Federal Reserve or Reserve Bank of New Zealand.

“The tone is a reminder that the New Zealand market has been left behind (in performance), and there’s a broadening in activity as investors seek out the winners and losers in the rate cuts.”

Solly said the market has to deal with a challenging reporting season, which begins next week. “It’s still a bit of a tightrope between when the central banks will cut rates and the latest company earnings. The market will spend a lot of time analysing the results and seeing whether earnings have reached their bottom.”

On Wall Street, the major indices slipped back as the market awaited key economic data this week – the S&P Global Purchasing Managers Index, the second quarter gross domestic product, and the influential Personal Consumption Expenditure Price Index inflation figures.

Commentators there believe any softening in economic data will guarantee a 25 basis points cut in the official cash rate on September 18, following the Federal Reserve Open Market Committee meeting.

The Dow Jones Industrial Average was down 0.14% to 40,358.09 points; the S&P 500 eased 0.16% to 5555.74; and Nasdaq Composite decreased 0.057% to 17,997.35.

At home, there was continued heavy trading in takeover target Arvida Group, up 1c to $1.62, with 22.2 million shares worth $35.8m changing hands. “Investors are continuing to sell and make money out of Arvida and putting it to work on the rest of the market,” Solly said.

The Warehouse Group, which has received a takeover bid at between $1.50 and $1.70 a share, was up 2c to $1.43.

Mainfreight gained $2.10 or 2.79% to $77.50 on the eve of its annual meeting, and Solly said the market will be keen to hear the tone of the discussions. One of Mainfreight’s global peers Kuehne Nagel had a better-than-expected half-year result.

Turners Automotive rose 18c or 4.27% to $4.39 on a broker upgrade from Forsyth Barr, and Air New Zealand continued to perk up, gaining 2.5c or 4.31% to 60.5c.

Market leader Fisher and Paykel Healthcare was up 35c to $33; Infratil gained 24c or 2.21% to $11.11; Freightways collected 18c or 2.04% to $9.01; Contact Energy added 11c to $8.60; Summerset Group increased 37c or 3.4% to $11.25; and Ebos Group was up 41c to $35.50.

Scales Corp increased 9c or 2.63% to $3.51; Vista Group gained 5c or 2.08% to $2.45; Accordant Group added 4c or 7.84% to 55c; Green Cross Health improved 3c or 3.57% to 87c; and Third Age Health was up 6c or 3.87% to $1.61.

Manawa Energy added 6c to $4.34; Vulcan Steel was up 12c or 1.7% to $7.17; Restaurant Brands gained 6c or 1.81% to $3.38; and ikeGPS rebounded a further 2c or 3.64% to 57c.

In the property sector, Investore increased 4c or 3.6% to $1.15; Stride was up 5c or 4.1% to $1.27; Argosy added 3c or 2.8% to $1.10; and Kiwi gained 1.5c or 1.76% to 86.5c.

Rakon increased 3c or 4.11% to 76c; PGG Wrightson recovered 5c or 2.5c to $2.05; My Food Bag rose 1.5 or 10.34% to 16c; Carbon Fund was up 5c or 3.33% to $1.55; CDL Investments added 2c or 2.74% to 75c; and TradeWindow gained 0.006c or 4.14% to 15c.

There was profit-taking in Ventia Services, which declined 12c or 2.55% to $4.58.

Auckland International Airport eased 8c to $7.71; Serko shed 8c or 2.06% to $3.80; PaySauce declined 1.5c or 6.12% to 23c; Burger Fuel was down 1.5c or 4.84% to $29.5c; and Marlborough Wines Estate decreased 0.008c or 7.62% to 9.7c.