Sharemarket gains as investors take a shine to travel stocks

Wednesday, 31 March 2021

Travel stocks including Auckland International Airport and Air New Zealand gained on optimism about a recovery.

The sharemarket rose as investors took a shine to travel stocks that will benefit from border re-opening.

The benchmark S&P/NZX 50 Index advanced 0.9 per cent, or 113.937 points, to 12,560.70 on Wednesday.

“The re-opening stocks are having a good day” as investors feel more optimistic about borders re-opening, said Dan Stratful, an investment adviser at Forsyth Barr.

“That trend will continue throughout the remainder of the year,” he said.

Retirement village stocks are recovering following a knee-jerk reaction lower last week after the Government announced measures to curb the housing market.

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Auckland International Airport rose 2.2 per cent to $7.84, Air New Zealand gained 1.8 per cent to $1.71, and travel booking company Serko advanced 0.3 per cent to $6.99. Cinema software company Vista Group, which benefits from cinema re-openings, was up 3.8 per cent to $2.20.

Stratful said retirement village stocks were recovering after their decline last week following the Government’s move to curb rising house prices.

“The retirement village sector is bouncing back a little bit after the Government housing policy came out,” he said. “They do better under a buoyant housing market so there was a bit of a knee-jerk reaction sell off and that’s now recovering.”

Summerset Group rose 1.1 per cent to $12.14, while Ryman Healthcare gained 1.5 per cent to $15.30.

The market’s gain may be underpinned by fund managers buying some high-flying stocks at the end of the quarter to improve the appearance of their fund’s performance, a practice known as “window dressing”, Stratful said.

Bucking the trend, New Zealand King Salmon fell 1.3 per cent to $1.50 after the salmon farmer reported a $7.1 million loss for the seven months to the end of January as it dealt with higher inventory due to the Covid-19 pandemic. It opted not to pay a dividend.

Elsewhere, US stock indexes closed lower on Tuesday as another swell higher for Treasury yields added pressure on big technology stocks. The S&P 500 lost 0.3 per cent. Banks and small-company stocks rose.

The spotlight was again on the bond market, where the yield on the 10-year Treasury rose to 1.73 per cent. Its jump this year has forced investors to reconsider paying such high prices for many stocks, particularly the tech giants that were big winners earlier in the pandemic. Yields perked higher after a report showed consumers are even more confident than economists expected.

President Joe Biden is set to unveil details on Wednesday about plans to spend what could be more than US$3 trillion on infrastructure and other measures to help the economy and environment.

– With AP