NZ stocks: Stocks lower on back of wall street slump

Trading started slowly on the New Zealand sharemarket this morning after stocks slumped on Wall Street overnight.

The benchmark NZSE-40 capital index initially languished down 11 points but by late morning was seven points down on 2069.28.

Turnover was light on 20 million shares worth $37 million.

DF Mainland broker Greg Arnott said the slowdown on Wall Street might well be the reason why a United States funds manager, which has been buying New Zealand stocks over the last few days, has not yet shown its hand.

Morgan Stanley had been index-buying a number of key stocks such as Fisher and Paykel, Sky City and Contact Energy, fuelling the NZSE-40.

"In some ways you could say it's a bit of a false rally ... Our market's had a jolly good run in the last two or three days."

Over the last week the benchmark NZSE-40 capital index has climbed 45 points, and Mr Arnott said it was anyone's guess as to whether the index would retain its gains.

"The 40 has a resistance level of about 2085 ... Personally, I'd say it's going to come off. Whether that's just by chance because the Dow happens to be down, who knows."

One of the major stories was Air New Zealand, which needs to urgently upgrade the fleet of its subsidiary, Ansett Australia. This morning the airline announced it was delaying its annual result, due out on September 13 .

Air NZ shares firmed, with A shares up 3c to 104 and B shares up 2c to 124, on the back of a New Zealand Herald report that Singapore Airlines had been given permission to lift its quarter shareholding in Air NZ, although not to the 49 per cent level proposed.

The Government denied the report, saying a rival bid by Qantas to buy Singapore Airlines' shareholding and sell Ansett to Singapore, was still in the ring.

Montana was one of the prominent movers this morning, trading three million shares worth $14.5 million, as Allied Domecq announced it now had three-quarters of the company's shares. Its price was up 2c to 478.

Another mover was Rubicon which remained unchanged at 83 but which saw 12 million of its shares traded for $10.4 million.

But most stocks had eased including star performers like Sky TV which was down 15c to 355; Fisher and Paykel was down 10c to 1440 and the Warehouse was down 3c to 595.

Tranz Rail bucked the trend, rising 10c to 440. Trading on Telecom shares was extremely light at 1.7 million, and the share price eased 2c to 504.

There were 23 rises and 39 falls on 109 stocks traded.

On Wall Street, fears of a drop in retail spending fuelled a 160 point slump on the Dow Jones index. New data showed consumer confidence had dropped to its lowest level in four months as a weakening job market weighed on consumers.

The Dow Jones industrial average slid 1.54 per cent to close at 10,222.03 while the broader Standard and Poor's 500 Index fell 17.70 points, or 1.5 per cent, to 1161.5.

The technology-laced Nasdaq Composite Index sank 47.43 points, or 2.48 per cent, to 1864.98. Year to date, the Nasdaq is down 24.9 per cent, the Dow off 5.2 per cent, and the S&P 500 is down 12 per cent.

US brokers said all eyes would now be on Wednesday's gross domestic product data for the second quarter, which would show whether the economy grew or shrank.

- NZPA