The benchmark S&P/NZX 50 Index jumped 1.15 per cent, or 141.752 points, at 12,462.47 on Tuesday.
Shares in The a2 Milk Company gained 3.2 per cent to $6.05. The stock has lost 50 per cent of its value this year following a series of profit downgrades after one of its key sales channels for infant formula to China dried up during the pandemic.
Milk processor Synlait, whose main customer is a2 Milk, surged 8 per cent to $3.24. The stock has dropped 38 per cent this year.
“There has been some buying interest in Synlait and some of those beaten up stocks and a2 was bouncing as well,” said Craigs Investment Partners adviser Peter McIntyre. “That is on value buying. The two are moving together in tandem.”
Energy stocks rose after a deluge of rain in Canterbury allayed fears about a lack of water stored in hydro lakes.
“The energy sector generally is quite strong,” said McIntyre. “There’s some more water flow coming in post those heavy rainfalls in the Canterbury region.”
Meridian Energy, which manages about half of New Zealand’s total hydro storage, increased 2.3 per cent to $5.35.
Contact Energy rose 1.4 per cent to $7.99, Mercury gained 3.7 per cent to $6.80, and Trustpower advanced 1.7 per cent to $8.65. Genesis Energy bucked the trend, slipping 1.2 per cent to $3.40.
The largest stock on the market, Fisher & Paykel Healthcare, gained 1 per cent to $30.10.
McIntyre said the mini-reporting season was now finished and investors were focused on the potential for rising inflation pressures and the outlook for higher interest rates.
A business survey on Tuesday showed China’s factory activity in May expanded at the fastest monthly pace this year as export demand picked up.
While that was a good indicator for global growth, “the big concern is inflation, and who is going to pull the trigger first with regard to rising interest rates”, McIntyre said.
Gold prices had picked up as investors sought to hedge against future inflation and market volatility, he said.
“There’s a degree of cautiousness out there,” he said. “We haven’t had any sign of inflation running through for a long period of time and I think investors are tending to position themselves for what they may see as interest rate increases over the next 18 to 24 months.”
Global stock markets were mixed.
US markets were closed for a holiday on Monday. Wall Street futures were higher.
In Asia on Tuesday, the Shanghai Composite Index gained 0.4 per cent to 3615.48.
The Nikkei 225 in Tokyo tumbled 1 per cent to 28,860.08 after May retail sales fell 4.5 per cent from the previous month. May factory output rose above pre-pandemic levels for the first time but 2.5 per cent growth was lower than expected.
The Hang Seng in Hong Kong rose less than 0.1 per cent to 29,151.80 while the Kospi in Seoul rose 0.5 per cent to 3203.92. The S&P-ASX 200 in Sydney was off 0.2 per cent at 7161.60.
– With AP
