Market report: Investors focus on earnings

The New Zealand sharemarket had a quiet day yesterday, unruffled by an Australian rate cut.

"The overall tone was very quiet," Deutsche Securities dealer Shane Gavegan said.

The benchmark NZSE-40 index closed up just 0.94 points at 1988.01, while the NZSE-10 was down 2.78 points at 875.27.

In a move widely expected by the market, the Australian Reserve Bank cut rates by 50 basis points to 5.75 per cent.

But local stocks seemed to turn a blind eye to the cut's negative message for growth in the region, with their focus remaining on the impending reporting season and the stack of strategic issues that could come to light then.

"Most of the market is awaiting the earnings season now," Mr Gavegan said.

Market leader Telecom continued to tumble on news that the Australian Competition and Consumer Commission expected to receive soon a bid from rival telco Vodafone Pacific for the mobile assets of Australia's number two telco, Cable & Wireless Optus.

This added to market fears over the New Zealand telco's ability to raise the capital to finance its own bid for Optus, and analysts' predictions the company will next week post a 20 per cent fall in profits for the half year to December 31 .

Telecom fell 10c to $5.37.

A fall in the dollar helped Fletcher Energy pick up slightly, with the stock closing up 3c at $9.03.

Fletcher Building was also up 1c at $2.10.

Contact Energy rallied 4c to $2.93 on news it was to increase natural gas prices by around 4 per cent because of higher costs. Mr Gavegan said last week's annual meeting in which major shareholder Edison Mission confirmed its interest in the company had also helped boost market perception of the stock.

Brierley Investments, led by chief executive Greg Terry, was up 2c at 35c on further strength in its British hotel group Thistle, whose shares have lifted from £1.16 at the start of the year to £1.45.

Advantage Group continued its revival, rising 10c to $1.48.

Vending Technologies built on its good run this month, rising 34c to $2.90.

Lion Nathan rose 9c to $4.94 on good turnover of $5.94 million, while Montana slipped 1c to $4.04. After the market closed Millstream, a division of Allied Domecq, bid $4.40 a share for Montana, trumping earlier bids by executive chairman Peter Masfen and Lion Nathan.

AMP jumped 41c to $24.11.

Utilico International, formerly Infratil International, closed up 1c at 36c after reporting a half-year profit of $1.6 million against last year's $4.6 million loss.

The New Zealand dollar ended easier yesterday but with upside potential.

The kiwi closed at 44.21USc (US44.52c on Monday) on medium volume.

The day's main point of interest was the Reserve Bank of Australia's decision to cut interest rates. "The aussie dollar has done pretty well given they had a 50-point rate cut," a currency dealer said.

"You might well see that aussie push on overnight," he said, with the kiwi likely to follow.

- NZPA