12.00 pm
The New Zealand sharemarket firmed in morning trade today but brokers said Wall Street's rally on gathering signs of a US recovery might not be particularly good news for the local market.
The NZSE-40 capital index was up just 4.60 points at 2077.77 at 11.30am on light turnover worth $22
million.
Telecom, which yesterday fell 7c and closed below $5 for the first time this year, recovered a couple of cents to 500. It led the turnover with 1.2 million shares traded worth $6 million.
US stocks rallied strongly as Wall Street bet last week's strong manufacturing data, combined with signs consumers are confident about an economic recovery, signal a rebound in corporate profits.
The blue-chip Dow Jones industrial average roared to a six-month high and closed 219 points ahead at 10,588. The technology-laced Nasdaq Composite Index closed up 56 points, or 3.1 per cent, to 1859, reversing an early loss.
Ironically the good news in the US could result in funds flowing out of New Zealand and Australia, which have been viewed as defensive markets.
"The issue now is, given the US economy looks as if it might be turning around reasonably convincingly, there is a flight of money back to those markets and also into Asia -- the high beta markets that are high growth and highly leveraged into the US recovery," said Salomon Smith Barney broker Craig Robins.
"The Australian and New Zealand markets have traditionally been fairly defensive and that's where a lot of people have parked their money.
"We will get dragged along, but we may underperform the big markets. You may start to see that change start to come in," he said.
The No 2 stock, Carter Holt Harvey, was also initially up, but then fell back to square on 193.
There were few standouts.
AMP was up 18c at 2303 while fellow fund manager Axa was up 10c at 377 and Tower was up 2c at 516.
Restaurant Brands, which reported its latest quarterly sales rose 9.6 per cent, was up 1c at 197.
Independent Newspapers eased back 3c to 415 after a good run, while Independent News Media exchangeables were down 5c at 855.
Force Corp convertible notes were up 13c at 123. United Technologies gained 7c to 817.
There were 55 rises and 20 falls among the 127 stocks traded.
- NZPA
