New Zealand shares followed US futures higher while the prospect of negative interest rates put pressure on the kiwi dollar, enticing investors on to the share market.
The S&P/NZX 50 Index rose 27.26 points, or 0.3 per cent, to 10,757.94. Within the index, 23 stocks rose, 21 fell and six were unchanged. Turnover was $124.8 million.
US markets closed stronger on Friday and futures are indicating a strong session tonight, helping propel the NZ and Australian markets higher.
The NZX 50 outperformed much of Asia, climbing higher with the Australian exchange. The S&P/ASX 200 was up 1.1 per cent in afternoon trading, while other Asian exchanges were trading around half a per cent stronger.
Greg Smith, head of research at Fat Prophets, said the Reserve Bank's suggestion that interest rates could go into negative territory was putting pressure on the currency and buoying equities.
"We've had the RBNZ signal negative rates are potentially on the table and what that says to me is one of the things we are going to do to combat the economic effects of covid is lower our currency," Smith said.
"By definition, if we can lower our currency, then it's a tailwind for the economy and the stock market."
Kiwibank senior dealer, Hamish Wilkinson, said the mention of negative rates was a "hammer blow" to the kiwi dollar, which closed out the week 2.4 per cent lower against the US dollar, falling below the 60 US cent mark and now sitting at 59.50 cents.
The local market was led higher by Tourism Holdings, which has substantial operations in the US and stands to benefit from the lower kiwi dollar. Its share price rose 3.5 per cent to $1.49 after being sold down 10 per cent last week.
Utility software developer Gentrack Group, which has exposure in the United Kingdom and other global markets, rose 3.5 per cent to $1.50.
A2 Milk rose 2.6 per cent to $19.95. Smith said investors might have been reassured by a more conciliatory tone coming out of China today after tensions with Australia over the covid-19 pandemic began to flare up over the weekend.
Manufacturer Skellerup Holdings rose 0.5 per cent to $1.98.
Pushpay Holdings started the week with its fifth consecutive gain, rising 1.6 per cent to $7.13. The stock rose 9 per cent last week and is up 70 per cent this month after forecasting more growth in the US market.
Z Energy fell 3.3 per cent to $2.90. The fuel-retailer was one of the worst performers last week, dropping 4.5 per cent across the week after releasing data showing demand for fuel remains weak.
Smith said with people unable to travel during lockdown the retailer had been unable to capitalise on increased volume from record low oil prices. Although Kiwis are getting back on the road, demand for jet fuel – a key product for the company – is not recovering so quickly.
With oil refining margins still under pressure, New Zealand Refining Company fell 1.3 per cent to 78 cents.
Sky Network Television, one of last week's best-performing stocks, fell 4.3 per cent to 33.5 cents. Last week it gained more than 9 per cent as investors anticipated the return of televised sports.
Smith said investors would be looking to whether customers had kept up subscriptions during the lockdown with no sports on air.
"It's all about to what extent subscribers have hung in there, and to what extent they have grown Neon and Lightbox," he said.
"You could argue the acquisition of Lightbox was really well timed, so it will be interesting to see what happens there."
Freightways posted the day's biggest loss, dropping 4.8 per cent to $6.90. The stock has rallied more than 30 per cent since its low in March causing investors to pause after a decent recovery, Smith said.
Metlifecare was unchanged at $4.30. The retirement village operator has filed an application with the High Court seeking to have a Swedish private equity firm's takeover offer enforced. In April, Asia Pacific Villages Group announced it was terminating the deal as the virus outbreak had caused an adverse effect on the business.