NZ stocks: Sharemarket slips after rate rise

12.20pm

The New Zealand sharemarket appeared to suffer a bout of indigestion after the Reserve Bank's announcement this morning of an interest rate hike with the threat of more to follow.

Stocks on the rise were few and far between after this morning's quarter of a percentage point rate rise to 5.5 per cent. Of the 129 stocks traded there were 59 falls and 17 rises.

Reserve Bank Governor Allan Bollard said the interest rate rise was required "to ensure inflation remains within the target range over the medium term".

He also said, "a further adjustment to monetary policy" may be necessary.

Stocks across the NZSX's top 50 fell with few exceptions.

The NZSX-50 gross index was down 18.98 points to 2637.25 and the NZSX-All capital index fell 5.41 points to 892.43.

By 11.30am Telecom was down 2c at 566, on turnover worth $19.8 million.

Total market turnvoer by 11.30am was worth $38.9 million.

Meanwhile Contact Energy which this morning announced a 63 per cent rise in first half profit also fell losing 11c to 580.

The electricity company reported a half year net profit of $55.3 million, up from $34 million for the same period the previous year and said it would pay an increased 7 cents per share fully imputed interim dividend.

ABN Amro Craig's Matt Willis said it was not surprising to see the market slip in the face of an interest rate hike.

"But I do think that needs to be seen in the context of how strong the market has been lately and I think investors as a rule might be looking to take a profit out of this market."

He said the rate hike was unlikely to have a negative impact on valuations.

Stocks heading south this morning included: Carter Holt Harvey down 4c at 210, Cavalier down 4c at 491, Fisher & Paykel Appliances down 4c at 481, F&P Healthcare down 8c at 1320, Fletcher Building down 4c at 455, Michael Hill Jeweller down 3c at 597, Port of Northland down 9c at 277, NZX down 5c at 925, Sky City Entertainment down 6c at 444, The Warehouse down 2c at 444, and Tenon down 2c at 193.

The few stocks to move up included: Trustpower up 1c at 420, Urbus up 1c at 93, Sky City Leisure up 1c at 88, Mainfreight up 2c at 190 and Briscoe up 1c at 144.

- NZPA