RTTNews - The New Zealand share market opened slightly higher on Wednesday, despite a negative overnight lead from Wall Street where U.S. averages closed lower on another round of profit-taking as traders there awaited tomorrow's Federal Reserve's rate decision and prognosis on the economy.
The benchmark NZX 50 index was up 6.52 points or 0.21% to 3,062.00 shortly after the market opened for the day, while the broader NZX All Capital index added 8.54 points or 0.28% to 3,107.00.
New Zealand's market was one of the few in the region to close lower on Tuesday. The benchmark NZX 50 index declined 25.5 points or 0.8 percent at 3.055.5. The New Zealand Stock Exchange reported trading volume of 42.5 million shares worth NZ$83.1 million. Declining issues outnumbered advancers 54 to 30 with 30 unchanged.
Overseas, U.S. stocks posted notable losses on Tuesday, as traders did some additional profit taking ahead of key economic data due out in the second half of the week. All the major U.S. averages ended the day firmly in negative territory, adding to the moderate losses posted in the previous session.
On the economic front, traders largely shrugged off the Labor Department's report showing a much bigger than expected increase in productivity in the second quarter. The report said that productivity increased by 6.4 percent in the second quarter compared to a downwardly revised 0.3 percent increase in the first quarter. Economists had expected productivity to increase by 5.5 percent.
Meanwhile, the Labor Department also said that unit labor costs fell by 5.8 percent in the second quarter following a revised 2.7 percent decrease in the first quarter. The steep drop in costs exceeded the expectations of economists, who had expected a 2.5 percent drop.
Separately, the Commerce Department released a report showing that wholesale inventories fell by much more than expected in the month of June, although the report also showed a modest increase in wholesale sales. The report showed that wholesale inventories fell 1.7 percent in June following a revised 1.2 percent decrease in May. Economists had expected inventories to fall 0.9 percent compared to the 0.8 percent drop originally reported for the previous month.
Traders are also looking to the two-day Federal Open Market Committee meeting that began today, although the Fed's rate decision is not expected to be revealed until tomorrow afternoon. The central bank is widely expected to keep the fed funds futures rate unchanged. However, the Fed's commentary on growth and inflation and any additional information on quantitative easing measures have the potential to move the markets.
The major U.S. averages all ended the day notably lower, although they were well off their worst levels of the day. The Dow closed down by 96.50 points or 1 percent at 9,241.45, the Nasdaq slipped by 22.51 points or 1.1 percent to 1,969.73 and the S&P 500 fell by 12.75 points or 1.3 percent to 994.35.
Crude oil prices finished below $70 per barrel on Tuesday as traders braced for what is expected to be a bearish EIA inventory report. Lower stocks also raised concerns for energy demand. Light sweet crude for September delivery settled at $69.45, down $1.15 on the session. This marks the lowest close since July 31.
On the currency front, the New Zealand dollar was buying US66.78c by about 8 am on Wednesday, compared to US67.35c at 5pm on Tuesday.
In the early trading on the New Zealand stock market on Wednesday market leader Telecom added 0.37%, as second ranked Contact Energy dropped 2.21% and Fletcher Building, the third best stock, surged 3.99%.
In the retail sector, Hallenstein Glasson remained unchanged, as jewelry retailer Michael Hill International fell 1.43%, Pumpkin Patch added 0.56% and Warehouse gave up 0.74%. Among energy stocks, TrustPower eased 0.6%, as Vector collected 0.48%.
Among the dual listed issues, AMP, Australia and NZ Banking Corp, APN News & Media, Lion Nathan, Telstra and Westpac Bank remained unchanged on Wednesday morning.
Among other notable stocks, Infratil, Methven and Sky Network Television remained unchanged, as Mainfreight lost 1.01%, Nuplex advanced 1.42%, Sky City gave up 0.59% and Steel & Tube Holdings fell 1.56%. While Fisher & Paykel Appliances dropped 2.44%, Fisher & Paykel Healthcare remained unchanged.
The gainers among the stocks listed under the NZX 50 index in the day's early trading included-- Ebos Group by 0.19%, Guinness Peat Group by 3.45% and PGG Wrightson by 1.11%.
The losers on Wednesday morning included-- AMP NZ Office Trust by 1.20%, ING Property Trust by 1.33%, New Zealand Oil & Gas by 1.22%, Port of Tauranga by 1.52%, Pike River Coal by 0.85% and Tourism Holdings by 1.64%.
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