New Zealand shares have snapped a three-day decline, tentatively joining a global rally on positive US economic data.
Telecom led the benchmark index higher as international investors sought exposure to the kiwi market, while units in Fonterra Shareholders’ Fund rose on lower input prices.
The NZX 50 Index rose just 6.064 points, or 0.1 per cent, to 5122.372 on Thursday. Within the index, 23 stocks rose, 20 fell and seven were unchanged. Turnover was $176.7 million.
Asian markets followed Wall Street higher after solid US economic data fuelled optimism over the recovery in the world’s biggest economy.
“We’ve seen a bit of a rebound over the last several days from some of the offshore markets, the S&P 500 in the US last night had a new record high so most markets over the world have followed suit,” said Mark Lister, head of private wealth research at Craigs Investment Partners.
“New Zealand has responded a little more modestly and I think that’s because we’ve had such a strong performance right through the year that we’re have held up better so there has been less of a bounce back.”
Telecom climbed 3.3 per cent to $2.535. The telecommunications retailer has a gross dividend yield of 6.5 per cent, something Mr Lister says is popular with international investors as its relative liquidity gives them easy exposure to the New Zealand market.
Units in Fonterra Shareholders’ Fund rose 2.3 per cent to $6.29 after global dairy product prices had the biggest drop in almost 20 months on Wednesday, lowering input costs for Fonterra.
The units give investors access to Fonterra’s dividend stream.
“If there is a little bit of pressure on that dairy payout then their costs of production fall a little bit and the shares are responding,” Mr Lister said.
Xero extended its decline, falling 2.1 per cent to $37.20. The cloud-based accounting software firm has dropped 9.3 per cent this week as brokers have reduced their growth forecast for the company and international tech stocks have come under pressure, Mr Lister said.
Z Energy fell 1.3 per cent to $3.89 after the transport fuel supplier said it’s targeting an increase of up to $50 million in annual operating earnings by 2018.