NZ stocks: Telecom rebound and strong Wall St benefit NZ

12.00pm


A rebound in market heavyweight Telecom and a strong showing on Wall Street today propelled the sharemarket higher in early trading.

Telecom recovered from two days of heavy selling to rise 2.2 per cent to 536c.

That helped push the NZSX-50 index up 13.93 points to 2454.33 and the NZSX-40 capital index up 14.23 to 2285.03 by 11.30am.

Trading in Telecom made up $20 million of the total market's $38 million turnover.

Sky City shares fell 3c to 455 after the casino operator said it was in talks with Las Vegas-based MGM Mirage Inc, owners of the MGM Grand Darwin casino, about the possibility of buying that business.

The stock fell 9c yesterday as the market got wind of the deal which brokers estimate could cost up to $200 million.

ASB Securities broker Stephen Wright said the price had fallen on uncertainty about how the deal would be priced and funded.

"People are worried they may pay too much or how it will be funding... When details come out and the deal is done it could be seen to be a very good deal and the share price might react the other way.

"It's just a knee jerk reaction but it might recover."

The local market's tone was helped by Wall Street where stocks recovered from a sharp drop in the previous session, as investors latched onto encouraging economic news and bet on a solid fourth-quarter earnings period.

The Dow Jones industrial average closed up 111.91 points, or 1.07 per cent, at 10,538.29. The broader Standard & Poor's 500 Index ended up 9.30 points, or 0.83 per cent, at 1130.52. The technology-focused Nasdaq Composite Index closed up 14.69 points, or 0.70 per cent, at 2111.13.

The latest New Zealand Institute of Economic Research (NZIER) quarterly survey of business opinion will have done nothing to increase worries in the market. It showed business confidence had held up well despite the huge rise of the New Zealand dollar.

A net 2 per cent of firms were pessimistic about business conditions over the next six months compared with a net 3 per cent and 20 per cent respectively for the previous two quarters.

NZ Refining, likely to be the beneficiary of rising world refined petrol prices and improved margins, added to yesterday's 50c gain with another 21 cents today to 1611.

Trustpower continued its erratic path this year, rising 15c to 665.

Exchange operator NZX rose another 5c to 630 today, bringing its gains this year to 11.5 per cent.

Other gainers included Waste Management, 4c to 412, The Warehouse, 5c to 530, ANZ Bank, 15c to 2050 and Software of Excellence, 10c to 189.

Stocks to fall included Contact Energy, 3c to 557, and Turners Auction, 5c to 495.

Of the 107 stocks traded by 11.30am, 30 rose and 20 fell.

- NZPA