New Zealand shares closed at their highest level in more than a month as investors were buoyed by the prospect of the lockdown coming to an end, with some of the hardest-hit stocks such as Vista Group International and Air New Zealand leading the market higher.
The S&P/NZX 50 Index rose 195.12 points, or 2 per cent, to 10,159.02. Within the index, 34 stocks rose, 13 fell and three were unchanged. Turnover was $184 million.
The benchmark index continuing to rally from its March 23 low as the pace of new Covid–19 cases slows, increasing the likelihood the lockdown will be eased on April 22.
Sam Trethewey, a portfolio manager at Milford Asset Management, said this was prompting investors to buy into stocks that will benefit as the consumer economy kicks back into gear.
"Cyclical or domestic economy exposures that have been under some pretty significant pressure recently are the stocks investors are getting a bit more excited about," Trethewey said.
"The key challenge at the moment is understanding what level 3 looks like, and what that means for each company."
Prime Minister Jacinda Ardern is expected to provide a detailed outline of what operations will be permitted under level 3 on Thursday.
Air New Zealand led the market higher, rising 15.6 per cent to $1.04. The airline has said it will focus on the domestic market for the foreseeable future as international travel has ground to a halt.
Other stocks set to benefit from increased consumer activity also gained.
Cinema analytics software developer, Vista Group International increased 14.9 per cent to $1.16, retailer Kathmandu Holdings advanced 7.8 per cent to 69 cents, and casino operator SkyCity Entertainment Group increased 7.4 per cent to $2.31.
Trethewey said while it was unlikely SkyCity would be able to reopen open their casino in the next few weeks, the mitigation of the virus meant reopening was coming closer than it had been.
The Treasury today released a range of scenarios for the impact of the virus on the domestic economy, all depicting a leap in unemployment and a year-long recession, followed by a recovery relative to the size of government stimulus.
Trethewey said a recession was already priced into the share market, but the depth and length could become a key issue for investors.
"Global equities are rallying on the improving case numbers, but that focus could turn onto the actual economic impacts of the virus and unemployment rates in coming weeks."
Domestic logistic company Freightways - often viewed as a bellwether for the domestic economy - rose 10.2 per cent to $6.28 as investors anticipated activity would significantly increase under level 3 restrictions. Global logistics group Mainfreight fell 0.9 per cent to $35.27.
Fletcher Building rose 8.4 per cent to $3.86 as investors considered its construction workers may be back on the tools sooner than expected.
Auckland International Airport advanced 1.2 per cent to $5.82, continuing to gain after last week's $1 billion capital raise.
"Investors are willing to take a long-term view on the asset and are not getting overly concerned about a year or two of poor dividends," Trethewey said
Media company NZME - which is outside the benchmark index - rose 8.1 per cent to 20 cents after it announced cost cutting measures, including shrinking its workforce by 200, to adjust for falling advertising revenue.
Sky Network Television increased 3.8 per cent to 27.5 cents
A2 Milk rose 5.1 per cent to $18.37 and Fisher & Paykel Healthcare increased 1.2 per cent to $27.31.
Trustpower posted the day's biggest decline, down 3 per cent at $6.21. Goodman Property Trust fell 2.5 per cent to $2.13 and Vital Healthcare Property Trust was down 2.6 per cent at $2.43.
Trethewey said the worst-performing stocks today had largely held up well through the recent downturn.