Market close: Sharemarket reacts positively to Federal Reserve's rate hike

The S&P/NZX 50 Index rose 10.66 points or 0.10 per cent. Photo / NZME

The New Zealand sharemarket, like others around the world, staged a relief rally as the United States Federal Reserve delivered its biggest interest rate hike in nearly 30 years to combat inflation.

The S&P/NZX 50 Index did slide as the day wore on, closing with a gain of 10.66 points or 0.10 per cent to 10,646.58 after reaching a lunchtime high of 10,766.14.

There were 86 gainers and 56 decliners over the whole market on another day of light trading with 40.97 million shares worth $124.92 million changing hands.

Markets reacted positively to the Federal Reserve's well-signalled move of increasing its benchmark interest rates by 75 basis points to a target of between 1.5 per cent and 1.75 per cent. The central bank is now expected to raise rates to at least 3 per cent this year.

Matt Goodson, managing director of Salt Funds Management, said the Fed made a step to restore credibility.

"The central bank was behind the curve [on inflation] and there was relief that the Fed in a sense gets it by tightening its monetary policy.

"The latest rates hike was anticipated by the markets, and the next question is how far the central banks need to go to get control of inflation and what impact this will have on corporate earnings," said Goodson.

Federal Reserve chairman Jerome Powell said the pace of future rises will continue to be data driven.

Pressure went on the Reserve Bank of Australia to move more quickly with its rate hikes after strong employment figures will likely stoke inflation. Some 60,600 new jobs were added in May, far beyond the estimate of 25,000.

The Australian S&P/ASX 200 Index was down 0.17 per cent to 6589.7 points at 6pm NZ time.

On Wall Street, the relief rally produced a 1 per cent rise in the Dow Jones Industrial Average to 30,668.53 points. The S&P 500, snapping a five-day losing streak that sent it into a bear market, gained 1.46 per cent to 3789.99, and Nasdaq Composite was up 2.5 per cent to 11,099.15.

At home, some of the beaten-down stocks made recoveries. Ryman Healthcare rose 34c or 4.05 per cent to $8.74, Summerset Group Holdings gained 16c to $9.48; Fletcher Building was up 6c to $4.86; and Napier Port increased 11c or 3.99 per cent to $2.87, having gained more than 9 per cent in two days.

Market leader Fisher and Paykel was up 22c to $19.45; Synlait Milk rose 12c or 3.91 per cent to $3.19; Air New Zealand gained 2c or 3.6 per cent to 57.5c; Vista Group increased 10c or 6.45 per cent to $1.65; and My Food Bag improved 4c or 4.65 per cent to 90c.

Sky Network Television rose 13c or 5.78 per cent to $2.38 after it told the market it was dropping discussions to buy MediaWorks Holdings. Instead, Sky TV was looking at options to return capital to shareholders and accelerate further investment in the business.

Goodson said: "I don't think anyone could make sense of Sky TV possibly buying MediaWorks."

KMD Brands picked up 3c or 2.75 per cent to $1.12; Vulcan Steel gained 12c to $8.82; carpet maker Bremworth increased 3c or 6.74 per cent to 47.5c; DGL Group was up 7c or 2.47 per cent to $2.90; and Vital Healthcare Property Trust improved 4.5c to $2.68.

Gentrack was up 3c or 2.08 per cent to $1.47; Kingfish Fund increased 6c or 3.9 per cent to $1.60; Scales Corporation climbed 10c or 2.27 per cent to $4.50; Scott Technology rose 6c or 2.13 per cent to $2.88; and Eroad was up 4c or 2.21 per cent to $1.85.

Freightways, one of the market's better performers, continued to slide, down 29c or 3 per cent to $9.38, after sitting at $12.56 in early April.

Auckland International Airport was down 18c or 2.44 per cent to $7.19; Chorus declined 9.5c to $6.86; Mainfreight shed 81c to $70.99; and Skellerup Holdings, another market performer, decreased 15c or 3.09 per cent to $4.70.

Steel & Tube fell 6c or 4.72 per cent to $1.21; AFT Pharmaceuticals was down 10c or 2.58 per cent to $3.78; Accordant Group declined 10.4c or 6.1 per cent to $1.60; and Geneva Finance decreased 4c or 6.78 per cent to 55c.