RTTNews - The New Zealand market opened marginally higher on Thursday after the Reserve Bank left interest rates unchanged at 2.50%. The marginally higher open follows a negative overnight lead from the Wall Street, where the major U.S. averages closed lower despite a Federal Reserve report that showed hints of an economic recovery.
The benchmark NZX 50 index was up 0.093 points or 0.00% to 2,990.56 shortly after the market opened for the day, while the broader NZX All Capital index added 1.33 points or 0.04% to 3,044.57.
Earlier in the day, the Reserve Bank of NZ announced that the Official Cash Rate (OCR) would remain unchanged at 2.50 percent, its record low level for a second straight month. The move was widely anticipated by economic experts. In a statement accompanying the rate decision, RBNZ Governor Alan Bollard said that despite signs of a leveling off in economic activity, the economy remains weak
New Zealand's share market was broadly lower on Wednesday. The benchmark NZX-50 index declined 28.0 points or 0.9 percent at 2,990.5. The New Zealand Stock Exchange reported trading volume of 37.9 million shares valued at NZ$61.9 million. There were 37 issues closing higher, 40 were lower and 31 were unchanged.
Overseas, U.S. stocks bounced around in negative territory through Wednesday's session in reaction to the day's slew of earnings and economic reports. The major averages all finished lower by modest margins, experiencing another lackluster session.
On the economic front, the Commerce Department released a report showing that orders for transportation equipment declined sharply in June, contributing to a substantial decline in orders for manufactured durable goods.
The report showed that durable goods orders fell 2.5 percent in June following a downwardly revised 1.3 percent increase in May. Economists had expected orders to fall 0.6 percent compared to the 1.8 percent increase originally reported for the previous month.
Excluding a 12.8 percent decrease in orders for transportation equipment, orders for durable goods actually rose 1.1 percent in June compared to a 0.8 percent increase in May. The increase surprised economists, who had expected ex-transportation orders to come in unchanged.
Equities saw some further downside after the Treasury Department said its $39.0 billion sale of five-year notes drew a high yield of 2.625 percent. Demand was much weaker than expected, with the bid-to-cover ratio coming in at 1.92 compared to the 2.58 posted in the previous auction. The bid-to-cover ratio is a measure of demand that indicates the amount of bids for each dollar worth of securities being sold.
Meanwhile, the markets saw little reaction to the Federal Reserve's Beige Book report. While the report indicated that economic activity continued to be weak going into the summer, it noted that most of the twelve Fed districts indicated that the pace of decline has moderated or that activity has begun to stabilize.
The major U.S. averages staged a recovery attempt in the final hour of trading, although they remained stuck in negative territory. The Dow fell by 26 points or 0.3 percent to 9,070.72, the Nasdaq slipped by 7.75 points or 0.4 percent to 1,967.76 and the S&P 500 declined by 4.47 points or 0.5 percent to 975.15.
Crude oil dropped sharply on Wednesday at the New York Mercantile Exchange after Energy Information Administration data revealed a sharp rise in weekly inventories. Oil closed at a 12-day low after reaching a three-week high earlier in the week.
Light sweet crude for September delivery dropped to $62.85 per barrel, down $4.38 on the session. Prices dipped as low as $62.70 earlier in the session after coming within a penny of $69 on Tuesday.
In the early trading on the New Zealand stock market on Thursday, market leader Telecom gained 0.71%, as second ranked Contact Energy declined 0.32% and Fletcher Building, the third best stock, eased 0.28%.
In the retail sector, jewelry retailer Michael Hill International remained unchanged, as Hallenstein Glasson gave up 1.14%, Pumpkin Patch slipped 0.64% and Warehouse dropped 1.02%. Among energy stocks, TrustPower remained unchanged, as Vector advanced 0.50%.
Among the dual listed issues, AMP, Australia and NZ Banking Corp, APN News & Media, Lion Nathan, Telstra and Westpac Bank remained unchanged on Thursday morning.
Among other notable stocks Infratil, Sky City and Steel & Tube Holdings remained unchanged, as Mainfreight declined 0.88%, Methven surged 1.43%, Nuplex added 0.55% and Sky Network Television eased 0.45%. While Fisher & Paykel Appliances remained unchanged, Fisher & Paykel Healthcare collected 0.63%.
The other major losers on Thursday morning included-- AMP NZ Office Trust by 1.28%, Freightways by 0.97%, New Zealand Oil & Gas by 2.50%, NZX Limited by 0.13%, Port of Tauranga by 0.32%, Pike River Coal by 0.88% and Rakon by 2.10%.
The gainers in the day's early trading included-- Goodman Property Trust by 1.02%, Guinness Peat Group by 1.79%, ING Medical Properties Trust by 0.85%, NZ Farming Systems by 8.51%, PGG Wrightson by 1.09%, Ryman Healthcare by 1.20%, Sanford by 0.76% and Tourism Holdings by 2.08%.
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