NZ stocks: Market trades quietly after rates rise

12.00 pm

The New Zealand share market traded quietly this morning following the Reserve Bank's move to raise rates, after the US Federal Reserve earlier kept rates unchanged.

Reserve Bank Governor Don Brash announced the rise in the Official Cash Rate by 25 points to 5.0 per cent today.

Dr Brash said the economy was running stronger than expected and he was withdrawing some "insurance" he took out in the wake of the September 11 attacks when he cut interest rates by over one percentage point.

First NZ Securities research manager Brian Stewart said not many New Zealand stocks would benefit specifically from the rise in rates, and the New Zealand dollar's recent good run was more important for companies.

"Effectively you should be targeting the cyclical stocks.

"The interest-rate sensitive stocks tend to be hurt by valuation -- the utilities, the property stocks. We've already seen the utilities, the lines companies in particular, probably face a bit of downward pressure.

"In terms of beneficiaries, given the New Zealand structure, there aren't many," Mr Stewart said.

By mid-morning the NZSE-10 capital index was up 0.8 points at 921.48 while the top-40 index was up 1.25 points or 0.06 per cent, at 2067.99.

Investment group BIL International was down 1c at 53 after recording a net profit of $US5.1 million ($NZ11.83 million) for the half year to December.

The result was a big improvement on the $US20.8 million loss posted in the same period a year earlier, and was buoyed by good gains from the sale of two Australian investments.

"Profit for an investment company merely reflects what they've bought and sold during a period so it's somewhat irrelevant. More importantly, you look at the structure of its asset base -- (BIL)'s asset base is reasonably illiquid," Mr Stewart said.

Turnover of 16.03 million stocks valued at $20.70 million, was topped by Telecom's $2.32 million. Telecom shares were up 4c at 490, while Australian telco Telstra was up 3c at 660.

Auckland International Airport lost 8c to 435 after its major shareholder, the Auckland City Council, yesterday approved the sale of its 25.7 per cent stake.

There have been past concerns that the sale would create a share overhang, but good profit figures have seen the stock rise by more than 16 per cent in the last three weeks.

Briscoe Group was down 3c at 173 ahead of its annual result tomorrow, Fisher & Paykel Appliances lost 5c to 940, Fletcher Building shed 4c to 295, casino company Sky City lost 5c to 578 and UnitedNetworks was down 5c at 805.

Takeover target Bendon rose a cent to 185, its suitor Pacific Retail Group was up 5c at 205, Carter Holt Harvey rose 5c to 197, Contact Energy was up 1c at 391, and financial services company Tower gained 5c to 508.

High-flier The Warehouse was unchanged at 715.

There were 30 falls and 21 rises among the 111 stocks traded.

On Wall Street the Dow Jones industrial average rose 57.50 points, or 0.54 per cent, to 10,635.25; the broader Standard & Poor's 500 Index added 4.74 points, or 0.41 per cent, to 1170.29; and the technology-laced Nasdaq Composite Index was up 3.81 points, or 0.2 per cent, at 1880.87.

- NZPA