NZ stocks: Telecom rockets past $6

The sharemarket percolated along yesterday, bubbling up more than 1 per cent in the Top-40 index after the surprise interest rate cut by the Reserve Bank.

The market had not priced in an interest rate cut, although many had hoped for one.

Cameron Stewart of ABN Amro said that although the move was positive, the market looked slightly overcooked.

"We've still got signs of growth in our market. We're going through a bit of a strong period while everyone else is coming off."

Star performer Telecom zoomed up 32c to close at $6.04, the first time since October last year it has crossed the $6 barrier.

Reinvestment money from the Fletcher Energy deal contributed to Telecom's rise, but many people were also buying ahead of an announcement by the Australian Stock Exchange today, expected to place Telecom on the ASX-200.

"Liquidity is the main question here, and Telecom just doesn't seem to have the amount of liquidity needed [to enter the index]," Mr Stewart said.

"If it is announced [today] that they're not in the Australian index, you seriously could see it lose 30c."

The NZSE-40 capital index was up 30.96 points, or 1.51 per cent, at 2075.58, while the NZSE-SCI capital index shed 32.44 points, or 0.62 per cent, to 5220.02.

Carter Holt Harvey bounced up 7c to $1.87 after the interest rate cut, which would make reducing its considerable debt pile easier, he said.

Contact Energy rose 1c to $2.97 on heavy turnover of 1.42 million stocks as Energy reinvestment money funnelled in that direction, attracted by Contact's good yield.

Lion Nathan was another riser, up 5c at $4.90, as the market also picked the Australasian brewer to be included in the ASX-200 today.

Another stock to benefit from the rate cut was The Warehouse, up 8c at $5.90, as lower interest rates were expected to give consumers more money to spend, he said.

The currency market welcomed the rate cut yesterday, allowing the kiwi to hold up in the face of Australian dollar weakness.

But the local dollar still finished marginally down at 41.92USc, as its Australian counterpart shed half a US cent to 50.28c, having hit a fresh all-time low at 50.21USc overnight.

The kiwi's relative stability enabled it to surge to 83.38Ac.

A currency dealer picked it to ride though to 85-86Ac over the June quarter as the neighbouring economies continued to dislocate.

- NZPA