The New Zealand sharemarket rebounded yesterday on news that the US Federal Reserve had agreed to provide a US$85 billion life raft for insurance giant AIG.
After suffering its biggest one-day fall in six years on Tuesday, the NZX-50 ended the day at 3269.93, up 42.63 points or 1.3 per cent.
Fletcher Building was up 20c to $7.27, Contact Energy firmed 6c to $8.76 while Telecom added 1c to end at $2.81.
ASB Securities' Stephen Wright said it was a small relief rally.
"It was a bit of relief I guess that the world didn't end overnight. It may be that our market had been overdone the day before."
But the mood was still skittish.
"It's still dependent on the sentiment and performance of overseas markets, which means of course that we can just as easily have a bad day [today] depending on what more news comes out."
Wright said it was difficult to say if the market had reached rock bottom.
"But again in New Zealand, companies have got low leverage, reasonable profits, good dividend yields and a lot of them have got some dividends coming up. That sort of holds us together pretty well but on a really bad day, we just take our lumps like everybody else."
Hamilton Hindin Greene director Grant Williamson said the fall on Tuesday drew out some bargain hunters yesterday, with news of the AIG bailout being viewed positively.
"That has calmed the markets a wee bit, but it's pretty tentative buying here. Investors are still being extremely cautious. I think most people know that there's still some major issues in the US, and it really has to play out.
"And I think it's just going to take time before we see any sort of real confidence return to the sharemarket."
US stocks rebounded, clawing back a day after their biggest drop in seven years.
An early report that the Federal Reserve was considering a loan to AIG pulled the market out of an afternoon funk. The market had been lower after the US central bank disappointed by opting not to cut interest rates.
The Dow ended Tuesday's trade (US time) up 141.51 points, or 1.3 per cent, to 11,059.02, after at turns rising and falling as much as 175 points in fractious trading. On Monday, it tumbled 504 points - its largest drop since the 2001 terror attacks.
AROUND THE WORLD
New Zealand: NZX-50 up 1.3 per cent to 3269.93.
Australia: ASX-200 down 0.6 per cent to 4722.2.
Hong Kong: Hang Seng down 3.6 per cent to 17,637.19.
Japan: Nikkei up 1.2 per cent to 11,749.79.
England: FTSE 100 surges 1.5 per cent in early trading last night.
US: The Dow Jones rose 1.3 per cent, to 11,059.02. The Standard & Poor's 500 gained 1.75 per cent to 1,213.60.