NZX gains 0.5%, Wall Street rally boosts S&P 500 to best day in two years

A 3% rally on Wall Street despite the biggest rate hike in two decades failed to ignite the New Zealand sharemarket on Thursday.

New Zealand’s benchmark S&P/NZX50 Index closed up 0.5%, or 58 points at 11,733.6, following a 0.1% slip on Wednesday.

“The New Zealand market has traded a little bit higher today, that was in reaction to Wall Street overnight,” said Hamilton Hindin Greene director Grant Williamson.

“Even though the Fed did raise interest rates, their comments going forward were maybe a little bit better than investors expected.”

New Zealand investors were not getting too excited by the Wall Street rally but it was just enough to bring few buyers in to bid up stocks which had shown weakness in the past few days, Williamson said.

The United States’ Federal Reserve raised its key rate to a range of 0.75% to 1%, the highest point since the coronavirus pandemic struck two years ago. Chairperson Jerome Powell said the Fed was “not actively considering” a bigger increase.

Courtney Crow

Wall Street had a huge rally despite the biggest rate hike in two decades from the US central bank.

Powell’s comments appeared to be aimed at easing fears the Fed, which was accused of reacting too slowly as inflation surged last year, might be headed for an unusually large rate hike of three-quarters of a percentage point at its June meeting.

“So we did see a huge rally on Wall Street last night,” Williamson said.

“That has flowed through to our market to a small degree. Most stocks across the board are trading higher.”

Top stock Fisher & Paykel Healthcare rose 1.1% to $21.50, Auckland Airport was up 1% at $7.88, and Spark rose 1.2% to $4.98, while Mainfreight lost 0.05% to $79.86.

Among the power generation and retail stocks, Meridian Energy was up 0.4% at $4.77, Mercury Energy rose 0.7% to $5.92, and Contact Energy was up 0.3% at $8.01.

A2 Milk was up 0.4% at $4.70, Ryman Healthcare gained 1.2% to $8.97, and Ebos was up 1.1% at $42.38.

Retailer The Warehouse jumped 4.9% to $3.40, and Briscoe Group was up 2.5% at 5.95 after a 1.7% increase in first quarter sales, against a period of huge growth a year earlier.

On the downside, Air New Zealand shares fell 6.3% to 81.5c after a bookbuild to find owners for 274 million shares which were not taken up by shareholders under the airline’s $1.2 billion rights offer, which was 88% subscribed.

All remaining shares were taken up at a price of 81c per share. That was a premium of 28c per share over the offer price of 53c per share, but was below their last closing price of 87c.

“Obviously the bookbuild wasn’t particularly strong when the price comes in at that 81c level compared to a market price yesterday of 87c,” Williamson said.

“It wasn’t extraordinary that the price does come down close to that bookbuild price.”

Across the Tasman, Australia’s S&P/ASX200 Index was up 0.7%, or 55 points, at 7360 in late afternoon trading.

Earlier on Wall Street, the benchmark S&P 500 index climbed 3% to 4300.17 for its best day in two years.

The blue chip Dow Jones Industrial Average jumped 2.8% to 34,061.06, and the tech-heavy Nasdaq composite climbed 3.2% to 12,964.86.

Roughly 85% of the stocks in the S&P 500 rose, with tech companies providing much of the gains. Apple rose 4.1%.

The price of oil was also on the rise. Brent crude, the price basis for international oils, advanced 52c to US$110.66 per barrel in London. It surged US$5.17 the previous session to US$110.14.

– With AP