RTTNews - New Zealand share market opened weaker on Thursday after the Reserve Bank of NZ the Official Cash Rate (OCR) unchanged at 2.5 percent.
The lower open was also prompted by the overnight losses on Wall Street, where U.S. averages closed lower on concerns that rising interest rates could adversely affect consumer and business spending.
The benchmark NZX 50 index was down 4.55 points or 0.16% to 2,823.41 shortly after the market opened for the day, while the broader NZX All Capital Index eased 2.05 points or 0.07% to 2,879.62.
New Zealand's share market rose slightly on Wednesday in light trading, as investors awaited the interest rate decision from the central bank. The benchmark NZX-50 index rose 5.57 points or 0.2 percent to 2,827.9. The New Zealand Stock Exchange reported turnover volume of 45.9 million shares valued at NZ$82.7.
Overseas, U.S. stocks, after a strong start, showed a notable downturn on Wednesday amid waning buying interest and disappointing results from a ten-year note auction. Nonetheless, the major averages were able to finish only modestly lower, as some traders picked up stocks at reduced prices later in the session.
While resource stocks initially helped to lead the way higher amid higher commodities prices, the major averages were unable to sustain the upward move and turned lower not long after the open. The Dow regained some ground going into the close but still ended the session down almost 25 points.
The Treasury Department's auction of $19.0 billion worth of ten-year notes drew a higher than expected yield of 3.99 percent, raising concerns about the outlook for interest rates. At the same time, the bid-to-cover ratio, an indicator of demand, rose to 2.62 from 2.47 during the previous ten-year note auction in May.
The bond market has been in focus recently, as traders have expressed concerns that interest rates have continued to rise despite the Federal Reserve's efforts to keep rates low through quantitative easing.
On the economic front, the Federal Reserve's Beige Book report indicated that conditions remained weak or deteriorated further during the period from mid-April through May. However, five of the twelve Fed districts noted a moderation in the downward trend, mitigating some market pessimism.
Separately, a report from the Commerce Department showed that the U.S. trade deficit for the month of April came in modestly wider than in March, as the value of exports fell by more than the value of imports.
In corporate news, the Supreme Court allowed the sale of Chrysler's assets to Italian automaker Fiat to move forward. In lifting a stay on the sale, the high court rejected a move by a group of plaintiffs, including three Indiana public pension organizations, to block the sale.
The major U.S. indices pared some of their losses late in the session but remained stuck in the red. The Dow closed down 24.04 points or 0.3 percent at 8,739.02, the Nasdaq closed down 7.05 points or 0.4 percent at 1,853.08 and the S&P 500 closed down 3.28 points or 0.3 percent at 939.15.
Crude oil finished above $71 per barrel at its highest level in almost eight months on the New York Mercantile Exchange on Wednesday. Traders mulled Energy Information Administration data that showed a decline in crude oil and gasoline inventories last week.
Light sweet crude for July delivery finished at $71.33, up $1.32. Prices reached as high as $72.43 in mid-morning trading.
EIA data showed U.S. commercial crude oil inventories decreased by 4.4 million barrels in the week ended June 5. The report backed the American Petroleum Institute data revealed Tuesday, showing crude supplies dropped 5.96 million barrels last week. Participation in the API survey is voluntary, so the EIA report is more closely watched.
On the currency front, the New Zealand dollar was buying US62.71c by 8am on Thursday, compared to US63.10c at 5pm on Wednesday.
In the economic news for Thursday, the Reserve Bank of NZ announced its decision to retain the country's official cash interest rate at its current level of 2.5 percent.
Announcing the rate decision, Reserve Bank Governor Alan Bollard indicated that the OCR won't be rising any time soon. He also there are signs that international economic activity is stabilizing and world financial conditions are getting better.
We expect the New Zealand economy to begin growing again toward the end of this year but the recovery is likely to be slow and fragile, he said. Many key economic indicators such as unemployment are projected to keep deteriorating well into 2010.
In the early trading on the New Zealand stock market on Thursday, market leader Telecom slipped 0.76%, as second ranked Contact Energy eased 0.18% and Fletcher Building, the third best stock, fell 0.44%.
In the retail sector, Hallenstein Glasson, jewelry retailer Michael Hill International and Warehouse remained unchanged, as Pumpkin Patch surged 2.27%.
In the energy sector, Vector gained 0.48%, as TrustPower remained unchanged in the early trading on Thursday.
Among the dual listed issues, AMP, Australia and NZ Banking Corp, APN News & Media, Lion Nathan, Telstra and Westpac Bank remained unchanged in the day's early trading.
Among other notable stocks, Infratil, Sky Network Television and Steel & Tube Holdings remained unchanged, as Mainfreight added 1.20%, Methven dropped 1.46%, Nuplex collected 2.44% and Sky City declined 0.36%. Fisher & Paykel Appliances was down 1.52%, while Fisher & Paykel Healthcare gained 0.32%.
Gainers in the day's early trading included- AMP NZ Office Trust by 1.37%, New Zealand Oil & Gas Limited by 1.24%, NZ Farming Systems by 1.96%, Pike River Coal by 1.65% and Ryman Healthcare Limited by 1.27%.
The losers on Thursday morning included- Freightways by 0.67%, Guinness Peat Group by 1.39%, PGG Wrightson Limited by 1.43%, Rakon Limited by 4.94% and Skellerup Holdings Limited by 1.75%.
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