NZ stocks: Sharemarket eases while Wall St tumbles again

12.30 pm

The NZ sharemarket eased in early business after Wall Street took another nasty tumble as the US Federal Reserve cut interest rates for the seventh time this year.

US stocks fell to their lowest since early April after the Fed gave investors little hope the sluggish US economy was rebounding.

The Fed, whose quarter per centage point was widely expected, signalled it was poised to cut further because of persistent weakness in the economy.

In the past, Fed easing was nearly guaranteed to give Wall Street a boost because investors anticipated lower interest rates would boost corporate profits. But the latest cuts left investors cold as this year's corporate profits are forecast to show the worst drop in a decade.

The blue-chip Dow Jones industrial average closed down 145.93 points, or 1.41 per cent, at 10,174.14 and the technology-laced Nasdaq Composite Index also was at its lowest since April 9, down 50.05 points, or 2.66 per cent, at 1831.30.

Here, the market continued to range trade as it has for two months.

The NZSE-40 capital index was off 7.48 points to 2028.67 just after 11am on turnover of $35.9 million, which was boosted by a big trade in Sky City.

ABN Amro broker Nigel Scott said the local focus was on the reporting season where Fletcher Building was today's main interest.

It posted a net profit of $19 million for its first three months as a stand-alone company.

Earnings before interest, tax and unusual items (ebit) was $42 million, while cashflow was $159 million. Pro forma accounts for the full 12 months show net earnings after tax and minorities but before unusuals of $34 million, with a bottomline loss of $272 million.

The loss was after previously disclosed one-offs of $181 million and a $125 million write-off of taxation benefits, arising from Building's separation from the Fletcher Challenge group.

Mr Scott said the company had cleared the books but earnings in the second half could be affected by higher energy costs. The stock fell 6c to 248.

Market leader Telecom fell 3c to 507 on turnover worth $5 million.

Sky City fell 5c to 1100 after its result yesterday on turnover of 1.3 million worth $14.6 million.

Mr Scott said the company had fully delivered on its core earnings but there were "issues" to sort out around its half-owned Force Corp which is having to raise $30 million in equity to satisfy its banks.

Sky has agreed to take up its entitlement and underwrite the issue.

Applefields, a big winner yesterday and soon to transform itself again into a US mining stock this time, fell back 1c to 21c.

Broadway rose 3c to 36 after yesterday posting a net surplus for the year to June of $762,000, up more than $600,000 on last year.

AMP fell 25c to 2265, Nuhaka fell 25c to 825 on slim turnover, Bliss rose 4c to 80c and The Warehouse fell 1c to 574 after a good gain yesterday.

Air NZ Bs were down 2c to 133 while the As were unchanged at 108. The Government today denied a report it was about to reject the request to allow Singapore Airlines to increase its stake.

There were 23 rises and 41 falls among the 119 stocks traded.

- NZPA