Shares rally on 'whiff of recovery'

Shares in Pumpkin Patch increased 3.79 per cent to $1.37. Photo / Steven McNicholl

NZX 50 Index back up to its highest since before the global financial crisis with Infratil leading the way.

New Zealand shares rallied again as a "whiff of recovery" emerges about the earnings season, amid an accumulation of more promising news about the world economy.

The NZX 50 Index shot to 4247.55, its highest since late October 2007, before the global financial crisis and just as New Zealand began heading into a domestic recession which preceded the global events.

That was a gain on the day for the leading stocks index of 47.26 points, or 1.12 per cent, on turnover of a respectable $134.40 million. Within the index, 33 stocks rose, 10 fell, and seven were unchanged.

"We have seen a very sharp rally in a very short period of time," said Shane Solly, at Mint Asset Management. "We're certainly catching the whiff of a recovery story out there."

Mint had forecast earlier this month there was "more juice" in the NZX tank, despite a 25 per cent rise in the NZX 50 last year.

However, Solly was surprised by how quickly it has happened over January, ahead of the corporate earnings season that kicks off in earnest the week after next.

The impact of dividends and changes to the makeup of the NZX 50 distorts long-term trends, but the index is still watched as a bellwether.

Leading the index higher yesterday was infrastructure investor Infratil, up 4.15 per cent to $2.51, its strongest performance this month, followed by children's clothes maker Pumpkin Patch, up 3.79 per cent to $1.37, and Freightways, up 2.69 per cent at $4.58.

The retirement home operators Metlifecare and Ryman Healthcare were the next biggest risers, up 2.53 per cent to $3.24 and 2.4 per cent to $4.69 respectively.

After announcing a return to two dividend payments a year and strong prospects in Tunisia and New Zealand, NZ Oil & Gas was up 2.3 per cent to 89c.

OceanaGold was the biggest loser, down 3.38 per cent to $3.25.

Fonterra Shareholder Fund units closed at $7.05, down 0.28 per cent, after falling as low as $7.01 during the day after a difficult week fending off fears about the discovery of minute traces of a nitrification inhibitor in milk powder.