MARKET CLOSE: NZ stocks rise along with global markets 29 Jun 2016
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Wednesday 29 June 2016 05:42 PM
MARKET CLOSE: NZ stocks rise along with global markets; Metro Glass, Xero, A2 lead gainers
By Sophie Boot
June 29 (BusinessDesk) - New Zealand stocks rose on stronger turnover as global markets bounced following days of selling, with Metro Performance Glass, Xero and A2 Milk Co gaining.
The S&P/NZX rose 87.62 points, or 1.3 percent, to 6,804.2. That's just shy of the 6,821.35 points the market closed at the day before the Brexit decision was made. Within the index, 39 stocks rose today, eight were unchanged and three fell. Turnover was $178.8 million.
The local market took a lead from international markets which strengthened overnight, with Wall Street's S&P 500 gaining 1.8 percent and London's FTSE 100 up 2.6 percent. Asian markets also rose this afternoon, recovering from the sell-off which occurred on Friday and Monday after the United Kingdom voted to leave the European Union.
"We've seen a bit of stability in the pound and offshore markets have all been stronger, so it certainly set the scene for New Zealand to have a stronger day," said Paul Harrison, managing director at Salt Funds Management. "The market seems to have gotten over Brexit quite quickly - central banks are making the right noises, liquidity hasn't dried up and banks seem likely to survive this without too much damage. The price moves are encouraging, people who were looking to sell have released some of that stock."
Stocks which were punished heavily in the sell-off have recovered today, Harrison said.
Metro Performance Glass, which shed 5 percent on Friday to $1.70 and fell further on Monday, was the top performer on the index today, up 5.9 percent to $1.80.
Orion Health Group rose 4.6 percent to $4.80, having dropped 5.5 percent from $4.86 on Thursday over Friday and Monday. A2 Milk gained 4.6 percent to $1.83. It fell 7.1 percent on Friday from an opening price of $1.82.
Xero, which fell 8.1 percent on Friday, gained 4.4 percent to $17.85, though is still behind its pre-Brexit price of $18.50. A report today from Deutsche Bank cut its target price for Xero to $18 from $18.55, and kept the rating at hold.
"It's a little surprising to see Xero as strong as it is today - the thesis of [Deutsche Bank's target price cut] was a difficult economy going forward in the UK would see slower business formation and slower growth in demand for the Xero software," Harrison said. "Xero would have a reasonable component of their earnings coming out of the UK, but the market seems to have taken that and run with it, and some of the other stocks like it."
Mainfreight, which also has European operations, gained 3.5 percent to $16.16.
Harrison said there could be a safe-haven effect coming back into the gentailers, as Meridian Energy rose 5.3 percent to $2.60, Genesis Energy gained 3.2 percent to $2.11 and Contact Energy advanced 1.2 percent to $5.17.
Comvita was the worst performer, down 0.4 percent to $11.55.
Outside the main bourse, Hellaby Holdings jumped 7.3 percent to $2.65 off the back of the sale of its equipment group to a private equity fund for $81 million. The Auckland-based company said it would use the net proceeds to expand its core automotive and resource services group.
(BusinessDesk)
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