NZ stocks: Shares 'sprinting out gate' after Wall St rally

11.50 am

Air New Zealand shares rallied along with the rest of the New Zealand stock market this morning after Wall Street enjoyed a reversal of fortunes overnight.

By late morning the NZSE-40 capital index had risen 2.29 per cent or 41.05 points to 1830.57 . The rise added more than $700 million to the sharemarket's value.

Brokers noted that trading had been "sprinting out of the gate" early this morning with 33.4 million shares changing hands.

Turnover was $36.11 million, with dominant stock Telecom leading the charge, rising 8c to 462 and capturing about 40 per cent of trading value.

DF Mainland broker Greg Arnott said the 367 point bounce on the Dow was "what our market's been looking for".

"I think what we're going to be looking for today is whether this rally will sustain itself."

Don Turkington, executive director or Forsyth Barr Frater Williams, was less optimistic, describing last night's swing by US investors from bonds to equities as a relief rally.

"It's the kind of thing you expect after six down days...we're going to see these kinds of movements off and on, we're going to see volatility but for the moment, the trend in shares is down and people should be cautious."

Longterm he said New Zealand should not expect to be untouched by a global economic slowdown.

"New Zealand's a bit out of kilter because of dairying and some other products like beef, so our commodity price cycle is a bit different to the rest of the world, and that is insulating us to some extent. But if this downturn continues for any length of time, nothing will be insulated from it."

Today, however, stocks were gaining across the board, even beleaguered Air NZ. By 11am Air NZ A shares had gained 6c to 24 and B shares had risen 7.5c to 23, recovering much of what they lost on yesterday's 40 per cent plunge in value.

Brokers said lack of information was driving the fluctuations and the Securities Commission today revealed it had asked for a copy of a report by the Stock Exchange's Market Surveillance Panel into Air New Zealand, the first ever such request.

The panel has been looking into whether the airline has been adequately informing the market about its financial position.

"Good quality stocks" with strong yields and earnings were in a particularly good position today, Mr Arnott said. Wrightson's was up 6c to 99 and Infratil was up 6c to 32.

Market darling Baycorp recovered some of its recent losses, adding 30c to 1035. Fisher & Paykel was up 10c to 1190, as was Sky City to 1030.

Other stocks to rise included Contact, up 3c to 335; Brierley, up 2c to 27; Sanford, up 10c to 590; Sky TV, up 15c to 330; and the Warehouse, up 7c to 587.

Australian-based brewer Lion Nathan was up 4c to 570 on $2.9 million shares, and Telstra was up 11c to 636 as mobile number portability was introduced across the Tasman today.

There were 83 rises and only 10 falls on 120 stocks traded.

On Wall Street, bargain hunters helped stocks surge higher overnight, carrying the Dow Jones industrials index up 4.5 per cent, or 367 points, to 8,603.30.

The Nasdaq composite index rose 75.85, or 5.3 per cent, to 1,499.04, while the Standard & Poor's 500 index advanced 37.59, or 3.9 per cent, at 1,003.39.

No one was predicting the gains to hold, however, and analysts said investors were waiting for a clearer picture as to how the US government would retaliate for the September 11 terrorist attacks. They were also trying to determine how much and for how long the economy would suffer.

- NZPA