New Zealand's share market opened sharply higher on Thursday after the Reserve Bank of New Zealand slashed its Official Cash Rate (OCR) by 50 basis points to 2.50 percent from the current rate of 3.0 percent.
While announcing the rate cut decision, RBNZ Governor Alan Bollard also hinted strongly that the OCR would remain were it is or move lower in the coming months.
The New Zealand stock market's higher open on Thursday morning was also prompted by a positive overnight lead from Wall Street, where U.S. stocks closed higher overnight on hints from the Federal Reserve that the recession is easing.
The benchmark NZX 50 index was up 35.37 points or 1.31% to 2,735.08 shortly after the market opened for the day, while the broader NZX All Capital Index added 32.88 points or 1.20% to 2,779.38.
New Zealand's share market posted a modest gain in a heavily traded session on Wednesday. The benchmark NZX-50 index was up 13.27 points or 0.49 percent at 2,699.71.
Trading volume was listed by the New Zealand Stock Exchange as 79.7 million shares valued at NZ$168.5 million. There were 36 issues closing higher, 37 lower and 41 were unchanged.
Overseas, stocks on the Wall Street closed higher Wednesday after the Federal Reserve held interest rates steady and said it saw signs the recession is easing. Stocks turned in a strong performance over the course of the trading day on Wednesday, with the major averages more than offsetting the losses posted in the two previous sessions.
The strength in the markets came as investors shrugged off some weak GDP results and mulled over remarks from the Federal Reserve. As was expected, the Fed left its target range for the federal funds rate at 0 to 0.25 percent and reiterated that it expects that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period.
Also, the Commerce Department released a report on Wednesday morning showing that GDP decreased at an annual rate of 6.1 percent in the first quarter, better than the 6.3 percent drop in the previous quarter, but considerably worse than the 4.7 percent decline economists had anticipated.
The major averages moved off their best levels of the day going into the close but remained firmly positive. The Dow closed up 168.79 points or 2.1 percent at 8,185.73, the Nasdaq closed up 38.13 points or 2.3 percent at 1,711.94 and the S&P 500 closed up 18.48 points or 2.2 percent at 873.64.
Crude oil closed higher on Wednesday on the New York Mercantile Exchange as Energy Information Administration data showed an unexpected decline in gasoline inventories. The rally took oil above the key $50 a barrel mark again.
Light sweet crude oil for June delivery ended at $50.97, up $1.05 on the session. Prices reached as high as $51.42 earlier in the session.
On the currency front, the New Zealand dollar was buying US56.40c by 10.15 am on Thursday, slipping from the US57.40c where it had been trading just before the rate cut announcement. The kiwi was buying US56.58c at 5pm on Wednesday.
In the economic news for Thursday, Business New Zealand releases its report on the number of new building projects authorized for construction New Zealand in the month of March at 22:45 GMT.
In the early trading on the New Zealand stock market on Thursday, market leader Telecom surged 2.21%, as the second ranked Contact Energy climbed 2.08% and Fletcher Building, the third best stock, jumped 2.35%.
In the retail sector, Hallenstein Glasson and jewelry retailer Michael Hill International remained unchanged, as Pumpkin Patch surged 3.48% and Warehouse added 0.86%.
In the energy sector, Vector collected 0.93%, as TrustPower remained unchanged in the early trading on Thursday morning.
Among the dual listed issues, AMP, Australia and NZ Banking Corp, APN News & Media and Westpac Bank remained unchanged, as Lion Nathan advanced 1.49% and Telstra collected 1.46%.
Among other notable stocks, Infratil was up 1.29%, as Mainfreight added 1.37%, Nuplex jumped 6.06% and Sky City collected 1.44%. Fisher & Paykel Appliances, Methven, Sky Network Television and Steel & Tube Holdings remained unchanged, as Fisher & Paykel Healthcare added 1.97%.
The only loser among the shares listed under New Zealand's benchmark NZX 50 index on Thursday morning was Air New Zealand Limited, with the company's stocks falling 0.93% in the day's early trading.
Major gainers in Thursday's early trading were - Auckland International Airport by 1.21%, Freightways by 2.50%, Goodman Fielder by 2.10%, Guinness Peat Group by 1.33%, Kiwi Income Property Trust by 1.10, NZX Limited by 1.45%, PGG Wrightson by 1.56%, and Tower by 1.54%.
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