MARKET CLOSE: Shares rise in global surge; Diligent, Sky TV, Meridian climb
New Zealand stocks advanced in a global rally after the Federal Reserve forecast lower interest rates, while government figures showed the local economy continues to grow. Diligent Board Member Services paced gains ahead reporting first-quarter sales. Sky Network Television and Meridian Energy rose.
The NZX 50 Index rose 7.692 points, or 0.1 percent, to 5192.154. Within the index, 27 shares rose, 12 fell and 11 were unchanged. Turnover was $184 million.
New Zealand's gross domestic product grew 3.3 percent rate in the year ended March 31, supporting the central bank's view that it must press on with interest rate increases to keep inflation at bay. Meantime, the US Fed lowered its forecast for US economic growth in 2014 to between 2.1 percent and 2.3 percent, from 2.8 percent to 3 percent, and cut its projections for long-term interest rates by about 25 basis points. Lower interest rates support the stock market as investors look for better returns.
Stocks across the Asia-Pacific gained, with Japan's Nikkei 225 Index up 1.5 percent in afternoon trading, Australia's S&P/ASX 200 rose 1.5 percent and Hong Kong's Hang Seng climbed 0.3 percent.
"The Fed's comments were broadly supportive for the market, with interest rates staying lower for longer and we had pretty strong GDP stats come out of New Zealand," said Shane Solly, director at Harbour Asset Management. "The grinding nature of the market is continuing up."
Diligent advanced 1.6 percent to a near six-week high of $4.57. Harbour's Solly said investors are preparing for the governance app maker's first-quarter sales tomorrow, the first since restating its financial statements for 2010, 2011 and 2012 after acknowledging it recognised revenue too early under US GAAP accounting rules. The company has set up new internal controls to avoid a repeat.
OceanaGold led the index higher, gaining 4 percent to $3.39.
Sky TV rose 1.2 percent to $6.87. Yesterday the pay TV provider said it will launch a subscription video on demand service by the end of the year in a challenge to Telecom's own offering as well as ASX-listed Quickflix, Ezyflix. Telecom slipped 0.2 percent to $2.70.
Harbour's Solly said ongoing political scrutiny for the leader of the Opposition Labour Party, David Cunliffe, ahead of September's general election is reducing the "regulatory threat" to energy companies.
Meridian advanced 1.3 to $1.215. MightyRiverPower rose 0.5 percent to $2.245 and Trustpower climbed 0.7 percent to $7.10. Auckland lines company Vector increased 0.4 percent to $2.56.
Infratil rose 0.4 percent to $2.435 after the infrastructure investor said it has provided interested parties with a confidential information memorandum on its Infratil Energy Australia (IEA) business and expects indicative offers for the assets by mid-July.
Outside the benchmark index, Lyttelton Port Co was unchanged at $3.13. Repairs at Christchurch's ocean trade hub, which was damaged in the 2010 and 2011 Canterbury earthquakes, are to be fast-tracked by Canterbury earthquake recovery minister Gerry Brownlee. The stock is tightly held with Christchurch City Holdings, the investment arm of the council, owning about 80 percent of the company, while Port Otago holds 15 percent.
PGG Wrightson was unchanged at 41.5 cents. The rural services company increased guidance for full year operating earnings to between $56 million and $58 million range, from the $52 million and $56 million range given in February.
SeaDragon was unchanged at 1.9 cents after the manufacturer of fish oil for health supplements said it expects to more than double annual sales as two squalene contracts worth US$6 million boost revenue are recognised in the second half and first half of next year. The Nelson-based refiner reported annual sales of $3.1 million for the year ended March 31, with a profit of $431,000.
On the New Zealand Alternative Index Foley Family Wines was unchanged at $1.45. The wine maker, which is majority owned by American businessman and vineyard owner Bill Foley, has met the last of its conditions for its all scrip takeover of Martinborough Vineyard Estates, crossing the 90 percent threshold required to mop up the remaining shares.
Chatham Rock Phosphate plunged 20 percent to 20 cents. The company is waiting for approval from the Environmental Protection Agency to mine phosphate nodules on the Chatham Rise, in New Zealand's Exclusive Economic Zone. Earlier this week the EPA rejected Trans Tasman Resources bid to mine ironsands from the ocean floor off the coast of southern Taranaki.