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The New Zealand market made some strong late gains yesterday as investors responded to the news of a positive vote in the US Senate for a second version of the US$700 billion bailout plan.
The NZX-50 index closed up 44.68 points, or 1.4 per cent, at 3232.64.
The
market was up just over 1 per cent at midday and had begun sinking back to a gain of just .66 per cent by mid-way through the afternoon until the vote provided a late boost.
Afternoon trading was also buoyed by a 13c lift in the share price of top stock Telecom which closed on $2.95 after its shareholders rejected two board candidates put up by US hedge fund Elliott International.
The bailout plan, which was turned down by US lawmakers on Monday sending shockwaves through world markets, passed through the US Senate by a wide margin of 74-25 after senators loaded it with tax breaks and economic sweeteners designed to make it more palatable to voters.
But it must still pass through the House of Congress which is expected to vote on it on Friday, Saturday NZ time.
ASB chief economist Nick Tuffley said the equity markets had held up well but trading remained light as investors waited for more certainty.
"There is a lot of uncertainty - until the bill is passed by the house and until the details are revealed that is likely to remain," he said.
The markets have been on a volatile rollercoaster this week falling 3.1 per cent on Tuesday after the failure of the first US plan and then re-gaining the ground on Wednesday following a strong bounce back in the US markets.
Brook Asset Management managing director Mark Brighouse said the second half of September had been one of the most volatile months on record and many investors were staying well away from the markets until they settled down.
"The second half of September was very extreme. The markets have been quiet as we look into the precipice."
US federal regulators announced they would extend an unprecedented ban against all short-selling in the shares of more than 800 financial companies, keeping it in place at least until after Congress enacts a massive financial bailout plan.
The Securities and Exchange Commission announced the extension of the ban, which was put in on September 18 in a bid to shore up investor confidence in the face of the spiralling market crisis.
The ban, which was to expire on Thursday, now will last until the third business day after enactment of the $700 billion financial bailout plan before Congress. It will end no later than October 17.
Meanwhile, the Australian sharemarket closed almost flat, down 33.5 points at 4761.1.
