NZ stocks: Shares lose sunny outlook after rate hike

The New Zealand sharemarket ended its sunny new year spell today, slumping 1.4 per cent after surprise interest rate calls from New Zealand and United States central banks.

By the 5pm close the benchmark NZSX-50 gross index was down 34.04 points or 1.35 per cent to 2485.88, while the NZSX-40 capital index was down 31.78 points or 1.36 per cent to 2306.39.

Turnover was a fair $96.43 million but the market's losers outnumbered gains 85 to 22 on 143 stocks traded. The day's losses across the board were characterised by market leader Telecom's 7c loss to 559.

Reserve Bank Governor Alan Bollard lifted the official cash rate by a quarter of a percentage point to 5.25 per cent in a bid to check the booming domestic economy, particularly the housing market.

Earlier this morning the US Federal Reserve opted to hold interest rates to keep the US economic recovery rolling, but its indication that a rate hike was looming pushed down Wall St stock prices.

"The market's been spooked by the RBNZ and the Fed, with stocks across the board falling", Direct Broking's Brett Wilkinson told NZPA.

Amro Craigs Equities' retail adviser Nigel Scott said it had been a "thought provoking" day.

"Looking across the board nearly all the New Zealand stocks are in the red... We're just trying to ascertain where to from here."

Mr Scott said the market had effectively been down 32 points all day. "We haven't really recovered in the afternoon session."

But he was also philosophical, "The falls have not been dramatic... You can't expect markets to go up all the time".

"It may be quite healthy our market has had a bit of a pullback".

Mr Scott said today's rate cut and US sentiment had not been the only factor driving stocks down. He cited Brierly Investments announcement that it was to sell its stake in Air New Zealand as another key influence.

The national air carrier's shares were placed in a trading halt yesterday pending the sale of BIL Ltd's 7.8 per cent stake, estimated to be worth more than $100 million.

Investment bank Goldman Sachs JBWere was today completing a 24-hour "bookbuild" of buyers of chunks of the stake.

It is also offering stock to retail clients who are "habitual" -- sophisticated -- investors. The stock closed yesterday at 49c.

Mr Scott said the sale was this year's "first real attempt by someone to raise some money through the equity market".

"Over January there has been generally limited competition for funds for the equity market, and of course yesterday you had NAB selling their three other stakes, St George HHG and AMP... Maybe some of our locals were offered some of that".

Also weighing on the market today was number two stock Carter Holt Harvey's disappointing 2003 full year result.

The company today confirmed its bottom line had been dragged down by a $876 million write-down of its 330,000ha forest estate, now valued at $2 billion.

Its shares fell 8c to 202.

"People had been saying for a little while that the share price had moved ahead of itself," Mr Scott said.

The stock's recent stellar performance had been powered by the prospect of a return to shareholders once the company had completed the sale of its tissue business and speculation it would sell its forests.

Direct Broking's Mr Wilkinson said the energy sector had a particularly bad day with NGC off 7c to 224 and Contact Energy off 10c to 560.

"Both these stocks had been topline performers, when a market falls investors often take profits in stocks that have risen," he said.

Among the few stocks to rise were Amp, which rose 5c to 520, Dorchester Pacific up 5c to 290, Guinness Peat Group up a cent to 191 and NZOG up a cent to 45.

Among stocks to fall were: Auckland Airport down 4c to 675, BayCorp Advantage down 4c to 320, Fisher and Paykel Appliances down 3c to 380, Fisher and Paykel Healthcare down 10c to 1220, Fletcher Building down 9c to 404, Independ Newspapers down 9c to 491, NGC Holdings down 7c to 224, Sky TV down 15c to 520, Steel & Tube Holdings donw 9c to 390, TelstraClear down 5c to 559, TrustPower down 5c to 685, he Warehouse down 12c to 513, and Waste Management down 7c to 425.

- NZPA