MARKET CLOSE NZ shares gain; Fletcher, Mainfreight advance, Chorus falls

New Zealand shares edged higher, led by Fletcher Building, on optimism growth in the domestic economy is starting to gain traction. Mainfreight rose after yesterday reporting a pickup in trading in recent months.

The NZX 50 Index gained 2.991 points, or 0.1 percent, to 4918.659. Within the index, 20 stocks rose, 25 fell and five were unchanged. Turnover was $133 million.

Fletcher, the biggest company on the index, rose 2.4 percent to $9.68, having gained from as low as $7.95 in early May.

"There's some pretty good confidence out there in the economy," said Grant Williamson, a director at Hamilton Hindin Greene. "We're starting to see some traction in the Christchurch rebuild and in the rural sector, now we're over the drought and soft commodity prices are staying firm."

Mainfreight, the global transport group, rose 2 percent to $12. Yesterday the company said a stronger performance seen in the second quarter for New Zealand, Australia, Asia and its Carotrans business in the US had continued through to November, putting it on track to lift earnings in 2014.

"There has been continued buying since they released their financials, which showed some improvement over the last few months," Williamson said.

The NZX 50 reached an all-time high last week and Williamson said the market may be "entering a period of consolidation" and the next rally would be led by earnings growth. "Stocks on current earnings are really at the upper end of where they should be" in terms of valuations, he said.

Skellerup Holdings, the rubber goods and milking equipment manufacturer, rose 2.4 percent to $1.71. Xero, the cloud-based accounting company, rose 1.9 percent to $35.85 and Fisher & Paykel Healthcare climbed 1.3 percent to $3.89.

Chorus, the network company, fell about 2 percent to $1.97, extending its slide since the regulator confirmed it would have to cut its prices by December next year. Telecom fell 0.4 percent to $2.325.

MightyRiverPower dropped about 0.9 percent to $2.17 and TrustPower was off 0.2 percent to $6.64.

Williamson said some investors are starting to fret about the possibility of a Labour-Greens government after the elections next year, and their threat to regulate the power market.

DNZ Property Fund rose 0.7 percent to $1.55 after saying earnings rose 8.7 percent in its first half and it expects dividends won't fall below current levels for the next two years even as it ramps up investment.

Steel & Tube Holdings slipped 0.6 percent to $3.15 even after the steel building products firm told shareholders that it expects first half earnings to be marginally ahead of the same period a year earlier as it benefits from price rises in an improving economy.

(BusinessDesk)