Sharemarket continues strong start to February; S&P/NZX 50 Index jumps 1.9%

Wednesday, 2 February 2022

The sharemarket continued its positive tone in February as investors took advantage of January’s weakness to buy stocks at bargain prices.

The benchmark S&P/NZX 50 Index jumped 1.9 per cent, or 230.698 points, to 12,289.64 on Wednesday, following a 1.4 per cent gain on Tuesday. The index shed 8.8 per cent in January.

“We had a very positive day on the market yesterday and another strong one today,” said Hamilton Hindin Greene investment adviser Jeremy Sullivan. “Bargain hunters are really starting to step in and see this market is oversold.”

Some investors were speculating that New Zealand’s Reserve Bank may not raise interest rates as quickly as previously anticipated after the Reserve Bank of Australia’s decision on Tuesday to keep its benchmark unchanged. The RBA said an end to its bond-buying programme did not imply the cash rate would soon be raised.

The sharemarket is off to a positive start in February after shedding 8.8 per cent in January.

* Fisher & Paykel Healthcare's 1.4pc gain helps boost NZX 50

* NZX50 up 0.3 per cent, boosted by Fisher & Paykel Healthcare

“That is a bit of a cue for our central bank as well that maybe raising rates as quickly as what they have indicated is not such a good idea,” Sullivan said. “Expectations for interest rate increases are just coming off the boil somewhat. Any change to the forward curve is going to be positive for the broader market.”

Transport and logistics company Mainfreight jumped 6.1 per cent to $89.99. In a trading update, the company said its pre-tax profit increased 85 per cent to just over $372 million in the 43 weeks to December 31, compared to the same period the previous year.

Managing director Don Braid said the financial results were not a surprise, rather a continuation of increasing freight volumes and trends seen in its first-half results.

Companies with a December 31 balance date are scheduled to start reporting their earnings from mid-February.

Some investors were taking positions on stocks ahead of the reporting season, Sullivan said.

The largest stock on the index, Fisher & Paykel Healthcare, rose 2.5 per cent to $29.73, having shed 9.3 per cent so far this year. Auckland International Airport jumped 5.5 per cent to $7.57, while retailer Warehouse Group gained 5.3 per cent to $3.18.

Insurance company Tower rose 5.2 per cent to 70.5 cents after reaffirming its profit outlook and confirming its plan to return $30.4m tax-free to shareholders through a share cancellation.

New Zealand King Salmon fell 2.8 per cent to $1.04. That follows a 12 per cent drop on Tuesday after the fish farmer warned that its profit would be dented this year and next year as warmer sea temperatures killed more fish than expected, particularly in the Pelorus Sound.

Elsewhere, Asian sharemarkets followed Wall Street higher while China, South Korea and Southeast Asian markets were closed for the Lunar New Year.

Wall Street's benchmark S&P 500 index gained 0.7 per cent on Tuesday, boosted by gains for energy and tech stocks in a late burst of buying. The Dow Jones Industrial Average gained 0.8 per cent, while the Nasdaq composite added 0.7 per cent.

- With AP