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Fletcher profits from infrastructure spend

NZ Newswire logoNZ Newswire 27/04/2017 Rebecca Howard

New Zealand shares rose on Thursday as Fletcher Building benefited from government plans to beef up infrastructure spending.

A2 Milk continued to climb after upbeat guidance and SkyCity Entertainment Group and Xero continued to recover as jitters around European elections and geopolitical tensions abated.

The S&P/NZX 50 Index gained 19 points, or 0.3 per cent, to 7354.62. Within the index, 33 stocks gained, 14 fell and 3 were unchanged. Turnover was $116 million.

"A little bit of the anxiety around Europe has eased," said Nigel Scott, director at Craigs Investment Partners.

While US markets were tepid and several Asian markets retreated after US President Donald Trump's tax cut plan failed to inspire investors, New Zealand bucked the trend as the economy continues to underpin good returns, he said.

"There are not too many places to go at the moment (to invest)" and the New Zealand market "is still providing investors with some level of return as the fixed income market has gone soft".

A2 led the index higher, rising 2.3 per cent to $3.53 after it forecast revenue of $525 million in the year ending June 30, up from $352.8m a year ago.

Fletcher Building added 2.1 per cent to $8.48, continuing its recovery after Finance Minister Steven Joyce announced a boost to spending on transport infrastructure over the four years, in part to cover the rebuild of State Highway 1 in the South Island.

In a pre-budget speech to the Wellington Chamber of Commerce, Mr Joyce lifted the Crown's planned capital spend by $2 billion over the next four years to $11 billion on top of existing projects.

Fletcher has come under significant pressure, sinking to a 12-month low last week on the back of an earnings downgrade. Metro Performance Glass also benefited from Mr Joyce's announcement, adding 5.5 per cent to $1.34.

Mr Scott said a number of stocks that lost ground in recent months, largely on global jitters, have recovered. Xero added 1.4 per cent to $21.15 while SkyCity rose 0.2 per cent at $4.49.

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