The Reserve Bank this week cut its Official Cash Rate to 2.25% and forecast GDP growth of 2.8% for 2027 and 3.1% for 2028 (March years).
Solly said the market had a much-improved tone.
“We’ve just come through a profit reporting season for the September period and we’ve actually seen more earnings ‘beats’ against expectations than ‘misses’, and so we’ve seen more profit upgrades,“ he said.
“I’m not saying it’s off to the races – not yet – but it’s better directionally, and we haven’t had that for a long time,” he said, adding that the market had endured three long years of negative earnings revisions.
Solly said annual GDP growth of around 3%, as forecast by the Reserve Bank, would be a good outcome, particularly against the backdrop of no population growth.
He noted consumer confidence – as measured by ANZ Roy Morgan – had lifted to its highest level since June, with more households expecting to be better off in a year’s time.
Solly said talk in the market was whether there would be a “Santa” rally going into Christmas, as is often the case, but he added that much depended on whether the US Federal Reserve cuts its fed funds rate on December 18 (US time).
Among the big-cap stocks, Infratil gained 28c to $11.67 on the back of data from the Australian Bureau of Statistics (ABS) showing new capital expenditure rose 6.4% in the September quarter.
“The lift in investment was the result of a large rise in spending on data centres, and investment in air transport,” the ABS said.
Infratil owns 48% of Canberra-based CDC – the largest privately-owned and operated data centre business across Australia and New Zealand.
Fisher & Paykel Healthcare continued to gain after reporting a strong first-half result this week, firming 45c to $37.30.
Among the other heavyweights, the previously out of favour Ebos rallied by 55c or 2% to $28.50, while Mainfreight gained $1.60 to $67.20, up 2.4%.
Infrastructure software specialist Gentrack gained 36c to $10.75 ahead of its investor day in Sydney on Monday.
Ryman gave up some post-result gains to end 1c down at $2.91, while Vulcan Steel dropped 23c or 2.8% to $8.00.
Among the small caps, New Talisman Gold Mines (NTL) traded at 4c a share before the company went into a trading halt pending the possible addition of a new investor.
“The NTL board must meet to consider the company’s current financial position and its strategic path forward,” NTL said.
“The board cannot reach a conclusion until it has heard from a potential investor who will advise us on their position early next week.”
Jamie Gray is an Auckland-based journalist, covering the financial markets, the primary sector and energy. He joined the Herald in 2011.
Stay ahead with the latest market moves, corporate updates, and economic insights by subscribing to our Business newsletter – your essential weekly round-up of all the business news you need.