Market close: NZ sharemarket shrugs off lockdown, focuses on Aussie QE

Now reporting season is almost over, investors are focusing on macro issues again

The local sharemarket gained as investors looked through the latest Covid-19 restrictions in Auckland and focused more on another round of quantitative easing across the Tasman.

Having under-performed Asian markets for most of the day, the S&P NZX-50 index closed up 74.51 points, or 0.61 per cent, at 12301.81 following a late surge.

Across the wider market there were 97 gainers and 56 decliners with just under 50m shares traded worth $167.17 million.

Grant Davies at Hamilton Hindin Greene said the local market had a reasonably strong finish to the day when news broke that the Reserve Bank of Australia had increased its bond buying programme and may continue further in a bid to push down market interest rates.

New Zealand shares had entered correction territory in recent weeks on the prospect of higher interest rates arising from a better than expected economic recovery.

Australia's central bank announced today it had doubled the size of its daily bond purchases from $2 billion to $4 billion, immediately driving the yield, or borrowing cost, on longer-term bonds down.

"With a little bit more liquidity going into that market we get the flow-on effects in New Zealand equities," Davies said.

"We've come out of reporting season and looking a bit more at macro issues and seeing a little bit of a pare-back of interest rate expectations. New Zealand has been a little bit more traditional but there is that chance we might follow suit."

The local market appeared to have anticipated further lockdowns in response to Covid-19, with Auckland sliding back into level 3 restrictions early on Monday morning amid concern a new community case could have exposed others to the more infectious UK variant of the coronavirus.

"There was probably a fair expectation that we were going to have another lockdown and a matter of when not if," Davies said, noting the main focus was on increased QE activity in Australia.

"The fact that we are seeing some QE across the ditch potentially increases the chance of something similar happening here ... swap rates in NZ have come off a bit today."

Among some of the individual stocks, A2 Milk continued to drift following its poor result and negative outlook last week. A2 ended the day down 19c, or 1.9 per cent, at $9.50.

Synlait Milk also fell, its shares down 12c, or 3 per cent, to $3.90.

Energy stocks had a mixed day with Meridian falling 5c, 0.88 per cent, to $5.65, Mercury up 10c, (1.65 per cent) to $6.15, Contact up 2c (0.29 per cent) to $6.80 and Genesis also up 2c to $3.51.

"Considering there's a decent-sized capital raising going on in that sector with Contact they are holding up reasonably well," Davies noted.

Shares in Vista Group rose 4c, or 2.35 per cent, to $1.74 after the company posted a $56.7m annual net loss, including $70m in non-cash items, compared to its previous year's $21.3m profit.

Thanks largely to a $62m equity issue early in the pandemic and tight cost control, the company ended the year with a cash balance of $67m and $39m in undrawn debt facilities.

Shares in Good Spirits, previously known as Veritas Investments, rose 2.63 per cent to 7.8c after the company reported an unaudited first-half loss of $121,151, compared with a profit of $292,275 in the previous corresponding half.

The company now runs eight bars in Auckland, one in Hamilton and is in the process of buying three Wellington pubs.

T&G Global's shares closed unchanged at $2.96 after the company's apple business increased revenue by 24 per cent to $875.2m for the year to December 31, helping boost the bottom line profit to $16.6m, up from $6.6m a year ago.

The day's biggest gainer was Plexure Group, whose shares closed up 8c, or 9.52 per cent, to 92c.