NZ shares tread water while waves of fear sweep Europe

Photo / File

The New Zealand sharemarket couldn't get out of bed yesterday, consistently trading below its close the day before, with its benchmark NZX-50 index four or five times spiking down by 13 points or more below that level.

The index lost 10 points in early trading as the European debt situation reared its head again in offshore markets, triggering wholesale selling across a wide range of risk assets as waves of genuine fear swept investors.

"Things in Europe just seem to be going from bad to worse; you get the feeling that authorities are merely trying to plug the holes in a sinking ship," said IG Markets strategist Ben Potter, in Melbourne. "At the end of the day, they're just delaying the inevitable."

After falling 22 points on Monday, the NZX-50 rallied at the last minute to close at 3430.38 points yesterday, down 3.76 points (0.11 per cent) on yesterday's close.

Among the 112 stocks traded - 62.2 million shares valued at $141.4 million - the 70 falls heavily outnumbered the 31 rises in share price.

Fletcher Building fell 5c in early trade but finished up 2c (0.24 per cent) at $8.62, and Telecom rose 5c (2.04 per cent) to $2.50.5.

Contact Energy dropped 5c (0.95 per cent) to $5.23, Mainfreight fell 12c (1.14 per cent) to $10.38, Fisher & Paykel Healthcare dropped 1c (0.38 per cent) to $2.64 and Sky TV was down 5c (0.85 per cent) to $5.83.

Air New Zealand fell 2c (1.71 per cent) to $1.15, and NZX Ltd - the exchange operator - fell 4c (1.68 per cent) to $2.34, but Infratil was on par at $1.80 despite over 15 million shares changing hands as a major shareholder divested a small portion of its stake.

Across the Tasman, the Australian sharemarket closed nearly 2 per cent lower, on the back of the same sort of concerns that affected markets throughout Asia.

The benchmark ASX200 index slumped 1.89 per cent to 4495.4 points, while the broader All Ordinaries Index dropped 1.79 per cent to 4563.5 points.

In the United States, those worries about the European debt crisis added to uncertainty caused by a lack of progress in budget talks between Republicans and Democrats.

The Dow Jones industrial average fell 1.2 per cent to end at 12,505.76, the Standard & Poor's 500 Index lost 1.8 per cent to 1319.49, and the Nasdaq Composite Index slid 2 per cent to 2802.62.

Markets had seemed to be recovering during the last half of June, with the Dow having its best week in two years in the last week of the month after several positive reports on manufacturing and consumer spending.

All three major indexes got close to their previous highs for the year.

But the run-up just gave markets more room to fall, said Ralph Fogel, an investment strategist at Fogel Neal Partners in New York.

-NZPA