MARKET CLOSE: Shares rise; MRP, Contact gain; Air NZ falls

New Zealand shares rose in a broad-based rally, including MightyRiverPower and Contact Energy, after the Reserve Bank surprised some investors by cutting interest rates. Air New Zealand declined.

The NZX50 Index rose 54.548 points, or 0.9%, to 5858.413. Within the index, 27 stocks rose, 11 fell and 12 were unchanged. Turnover was $130 million.

The central bank cut the official cash rate 25 basis points to 3.25%, causing the kiwi dollar to drop nearly 2c. New Zealand equities gained, as their relatively high yield lured investors while a weaker dollar favoured companies with offshore operations. MRP climbed 3.2% to $2.745. Contact Energy gained 2.3% to $5.40. Fletcher Building rose 2.5% to $8.62. Fisher & Paykel Healthcare advanced 1.8% to $6.99.

"The key today was the Reserve Bank move and that certainly saw a few things move, and the kiwi dollar fell away quite considerably against all cross rates," helping companies bring back offshore earnings, said James Lindsay, who helps manage $400 million in equities for Nikko Asset Management. "The interest rate move would be pretty important from a relative basis to deposits and it helps support the market. To be honest it's very multifaceted – a lot of dynamics are in play today."

Across the Tasman the S&P/ASX 200 Index rose 1.4% in late afternoon trading, as banks rebounded from a selldown ahead of tough new capital requirements. The gains flowed through to the dual-listed banks, with Westpac Banking Corp gaining 5.3% to $35.30, leading the benchmark index higher. Australia and New Zealand Banking Group rose 5.1% to $35.16.

Air New Zealand was the worst performer on the NZX 50 Index, down 2.6% to $2.60, extending yesterday's 5% drop. The national airline may face competition on its New Zealand-to-North America route, with rival Qantas Airways and American Airlines beefing up their codeshare and flagging a possible new trans-Pacific route from New Zealand.

A2 Milk Co rose 1.8% to 58c. The dual-listed milk marketing company is suing the Australian Broadcasting Corporation alleging misleading and deceptive statements in advertising its consumer affairs programme, The Checkout.

NZX, the stock market operator, was unchanged at $1.10. G3 Group, a mail operations and document management company, will launch NZX's market for small- to medium-sized businesses with a compliance listing on the NXT market.

Kiwi Property Group, the country's biggest listed property investor, had its shares halted for the final leg of its one-for-nine entitlement offer to raise $151.9 million to help fund the Sylvia Park expansion and repay bank debt. The application price of the shares was $1.20, a discount to their most recent trading price of $1.255.

Spark New Zealand fell 0.4% to $2.84.

Outside the benchmark index, Pumpkin Patch slid 15% to 20c. Chief executive Di Humphries will leave the ailing children's clothing chain in early November after the company's board decided to knuckle down on lifting the business's performance instead of accepting what it said were substandard offers to buy the firm.

On the New Zealand Alternative Index, GeoOp was unchanged at 50c. The workforce management app widened its annual loss to $4.87 million from $4.59 million, as it invests in product development and adding new customers.

TruScreen surged 8% percent to 27c after the cervical cancer test developer said it has been selected by Chinese oil company Sinopec to screen 130,000 of its female workers, in a deal that could be worth $1.1 million in sales.

Burger Fuel Worldwide climbed 11% to $3.55 after it said full-year profit rose 33% to $532,000 as the fast food franchisor expanded its footprint of franchised outlets in the Middle East, Australia and New Zealand. Expanding in the US is expected to result in a loss for 2016.

(BusinessDesk)