Contact Energy shares hit three year high – market close

Contact Energy's shares increased 53c or 5.72% to $9.80 surpassing its previous record of $9.43 set on June 14. Photo / Grant Bradley

Contact Energy reached a three-year high* with a rise of nearly 6% as the New Zealand sharemarket staged a late surge to keep the Santa rally rolling.

To begin with, the S&P/NZX 50 Index lacked any drive in the holiday trading. But it suddenly had a 1% turnaround in the last hour and closed at 13,270.01, up 64.91 points or 0.49% after reaching an intraday low of 13,100.53.

The index reached its highest close of the year after five successive days of gains. It hit 13,212.92 on November 27. There were 16.97 million share transactions worth $79.38 million.

Paul Robertshawe, investment officer with Octagon Asset Management, said: “I don’t want to read too much into the day-to-day movements at this time of the year as the volumes and liquidity are so low, creating volatility.

“But I hear the Boxing Day sales went reasonably well. We will know more when we get a couple of company updates in late January.”

United States shares took a drop over the weekend as long-term bond yields continued to rise. The US 10-Year Treasury note yield hit its highest level since May at 4.63%. The NZ 10-Year Government Bond yield increased 6 basis points to 4.5%.

The Dow Jones Industrial Average was down 0.77% to 42,992.21 points; the S&P 500 declined 1.11% to 5970.84; and the Nasdaq Composite fell 1.49% to 19,722.03.

Market analysts now expect the US Federal Reserve to delay any more interest rate cuts until the May meeting as it grapples with sticky inflation while keeping an eye on a cooling labour market.

At home, Contact Energy increased 53c or 5.72% to $9.80 on trade worth $9.82m. The highest it has been since it hit $10.75 on January 8, 2021. Ryman Healthcare also led the market higher, rising 21c or 4.53% to $4.85.

Robertshawe said the higher Contact’s price goes, the more likely it will be included in the MSCI World Index after the latest rebalance (in February).

“It would be big for Contact in terms of volumes and demand as it will be followed by more [international] investors. There is now competition between Contact and Mercury on market capitalisation.”

Mercury is the fifth New Zealand stock in the world index, alongside Fisher and Paykel Healthcare, Meridian Energy, Auckland International Airport and Infratil, which qualify with a market capitalisation of more than $10.5 billion.

The index includes another below that threshold. Mercury has a market cap of $8.34b and Contact $7.82b, but Contact has a larger free float of shares since Mercury is 50% owned by the Government.

Mercury Energy was down 18c or 2.93% to $5.96, while Meridian was up 7c to $6.02; Manawa added 8c to $5.58; and Vector also gained 8c or 2.04% to $4.

Fisher and Paykel Healthcare provided late market support, rising 41c to $39.01 and closing in on its all-time high of $39.21.

Gentrack was up 30c or 2.38% to $12.90; Port of Tauranga increased 15c or 2.37% to $6.48; Eroad added 3c or 2.73% to $1.13; Turners Automotive collected 20c or 3.77% to $5.50; Colonial Motor gained 19c or 2.94% to $6.66; and Fonterra Shareholders’ Fund was up 11c or 2.14% to $5.25.

Synlait Milk was up 1c or 2.41% to 42.5c; Steel & Tube increased 3c or 3.66% to 85c; Serko added 7c or 1.87% to $2.82; Accordant Group was up 2c or 4.17% to 50c; and Solution Dynamics improved 3c or 4.48% to 70c.

Freightways was down 12c to $10.63; Sky TV declined 7c or 2.62% to $2.60; The Warehouse shed 4c or 3.77% to $1.02; Napier Port decreased 8c or 3.04% to $2.55; Green Cross Health fell 4c or 4.76% to 80c; and 2 Cheap Cars was down 2c or 2.5c to 78c.

In the property sector, Vital Healthcare Trust was up 3c to $1.82; Kiwi declined 3.5c or 3.7% to 91c; and Stride was down 2c to $1.34.

*An earlier version of this story incorrectly stated Contact shares had hit an all-time high