New Zealand equities stormed past 4200 on the NZX 50 Index, recovering ground lost since mid-January despite a mixed first full week of corporate earnings as Telecom Corp became the latest big corporate to announce big job cuts.
The NZX50 index of leading stocks rose 44.175 points, or 1.1 percent to 4,214.603, a level not seen since January 18, when there was a surge of pre-earnings season optimism about earnings quality.
Total turnover was unusually heavy at $200.5 million, at the end of the biggest week of the mid-year earnings season.
Within the index, 26 stocks rose, 17 fell and seven were unchanged.
Pre-season optimism had looked in danger of being snuffed out this week as leading stocks either disappointed or only just made earnings guidance.
However, announcements of job cuts in both New Zealand and Australia by heavyweights such as Fletcher Building gave investors heart that senior managers had strategies to deal with sub-par earnings in the weak New Zealand economy.
Fletcher, Telecom and Contact Energy, together worth 26.3 percent of the NZX 50, all rose after announcing hundreds of job cuts, along with barely adequate earnings, as institutional investors saw evidence of companies with plans to improve earnings.
"We've got more to go. We've just started the process," says Shane Solly at Mint Asset Management. "We've been concerned that there's been a bit of phony war going on" in New Zealand, with large employers delaying lay-offs until signs of an improving economy emerged.
A lot of the job losses in coming months would be in middle management, he says. "It's not the man in the street, it's their bosses."
Telecom was the third strongest riser today, up 3.85 percent to $2.29. After taking a pummeling earlier in the week and earning a "reduce weighting" call from analysts Morningstar, Fletcher rallied 1.52 percent today to close at $8.68.
Telecom chief executive Simon Moutter foreshadowed a 'air, fast and fearless' restructuring in the next 10 months to refocus the company to mobile and data services.
Contact, at 4.3 percent of the NZX 50, surged during the trading day, although it finished only 1.73 percent up for the week after reporting solid half year earnings and a plan to cut 10 percent of its staff of 1100.
Fletcher, which has bigger problems in Australia than New Zealand, where Auckland activity and the Christchurch rebuild are raising demand, closed the week up.
However, leading the index higher on surging world gold prices was OceanaGold, spiking 8.1 percent to $2.82, while New Zealand big shed retailer Warehouse Group also made a strong showing, up 4.2 percent to $3.50.
AMP earnings announced to the ASX this morning disappointed the market and saw the stock lead fallers on the index 3.1 percent to $6.55.
This article is tagged with the following keywords. Find out more about MyNBR Tags
- Sky says Roy Morgan's Neon number is too low, reveals On Demand usage
- Fellet unmoved by media company 'for-sale' signs as Sky TV mulls capital options
- Sky and Duco vs the Parker pirates: a Q&A
- $100m later, Woosh Wireless goes into voluntary administration
- Commerce Commission files against Vodafone, alleges misleading 'Red Essentials' mobile plan
Most listened to
- Can Arvida continue at this pace? CEO Bill McDonald weighs in
- AFT’s Dr Hartley Atkinson says the country will increase overseas revenue but it will be a “drip feed”
- US drone shocks in Pakistan with frightening questions in EgyptAir crash on Foreign Affairs Scope with Nathan Smith
- AMA: Orion boss Ian McCrae delivers 10 quickfire answers to 10 quickfire questions from readers
- Government debt will top out at about 26% of GDP, well below most other countries, says Professor Niall Ferguson