New Zealand shares gained after the Reserve Bank's unexpectedly large interest rate cut revived demand for yield stocks, boosting the likes of Mercury NZ to a record.
The S&P/NZX 50 Index advanced 199.09 points, or 1.9 per cent, to 10,786.26, recovering all of yesterday's sharp sell-off. Within the index, 45 stocks rose, three fell, and two were unchanged. Turnover was $151.8 million.
The local market jumped after the Reserve Bank cut the official cash rate by 50 basis points to a record low 1 per cent, providing more stimulus earlier than economists had anticipated. Asian markets were mixed following Wall Street's recovery overnight as investors remained nervous about the escalating trade tensions between China and the US. Hong Kong's Hang Seng fell 0.3 per cent in afternoon trading, while Australia's S&P/ASX 200 Index was up 0.7 per cent and South Korea's Kospi 200 decreased 0.2 per cent.
"After a bit of a rough day yesterday, the market recovered last night and the Reserve Bank came to the party today," said Grant Davies, an investment advisor at Hamilton Hindin Greene.
"The usual suspects took off today - Mercury, in particular, is a favourite, but going down the list it's all those dividend yield stocks and property stocks too."
Mercury, which closed at a dividend yield of 3.23 per cent, led the market higher, up 5.6 per cent at a record $4.94. About 982,000 shares changed hands, more than its 90-day average of 607,000. Chorus, which closed at a dividend yield of 4.13 per cent, rose 4.7 perc ent to $5.62, and Contact Energy advanced 3.1 per cent to $7.92 on a volume of 1.2 million shares. It closed at a dividend yield of 4.5 per cent.
Air New Zealand rose 2.3 per cent to $9.50 after Jarden analysts raised their target price on the stock by 10 cents to $2.70, saying the airline's solid dividend yield - 8.06 per cent - will continue to support the share price over the medium term.
Vital Healthcare, which reports tomorrow, was up 1.2 per cent at $2.605, Precinct Properties New Zealand advanced 2.3 per cent to $1.795 on a volume of 1.9 million shares, and Argosy Property increased 1.1 per cent to $1.41, on a volume of 2 million shares, more than twice its average of 653,000.
Spark New Zealand was the most traded stock on a volume of 4.7 million, more than its 3 million average. It rose 3.5 per cent to $4.12. Infratil, which took a 49 per cent stake in Vodafone New Zealand last week, increased 2.8 per cent to $4.75 with 1.2 million shares changing hands.
Of other stocks trading on volumes of more than a million shares, Meridian Energy was up 3.4 per cent at $4.84, Oceania Healthcare advanced 1 per cent to $1.03, Ryman Healthcare increased 2.3 per cent to $13.30, Arvida Group rose 2.2 per cent to $1.37 and Fletcher Building was up 0.4 per cent at $4.74. Kiwi Property Group rose 1.6 per cent to $1.63 and Goodman Property Trust was up 1 per cent at $2.08.
Fonterra Shareholders' Fund units increased 0.8 per cent to $3.78, and Fonterra Cooperative Group's farmer-owned shares rose 1.3 per cent to $3.79 after the dairy exporter said it couldn't find a buyer for its entire stake in Beingmate Baby & Child Food, and may sell the shares on market in Shenzhen.
Exporters also benefited from a slump in the kiwi dollar after the Reserve Bank cut the OCR. Sanford rose 2.4 per cent to $6.90, Ebos Group increased 1.9 per cent to $24.31, Gentrack advanced 1.6 per cent to $5.23 and Fisher & Paykel Healthcare was up 1.3 per cent at $16.
A2 Milk, which often drives the benchmark index's direction, edged up 0.1 per cent to $16.57, while Synlait Milk increased 0.6 per cent to $9.38.
Cinema analytics developer Vista Group International was the day's worst-performing stock, down 2.7 per cent at $5.50 on a volume of 380,000 shares, in line with its 337,000 average. Pushpay Holdings decreased 1.2 per cent to $3.21.
Mercury's 2049 capital bond paying annual interest of 3.6 per cent was the most traded debt security on a volume of 850,000. The notes closed at a yield of 2.75 per cent, down 15 basis points.