NZ stocks: Trading volatile following surprise rate cut

6.00pm

The New Zealand sharemarket reacted positively to today's surprise announcement of a rate cut by the Reserve Bank before losing impetus in a volatile day's trading.

The NZ50 gross index rose 15.47 points or 0.781 per cent to finish at 1994.357 . The NZSE-40 rose by 14.678 points or 0.755 per cent to finish at 1959.630.

Reserve Bank governor Alan Bollard lowered the Official Cash Rate by 25 basis points to 5.50 per cent, citing a slowing global economy, dry conditions, power shortages and the deadly Sars outbreak as threats to New Zealand's growth outlook.

JB Were senior institutional adviser Murray Rutherford told NZPA the market was surprised at the Reserve Bank's decision.

Opening at 1978 this morning, the NZ50 gross index reached past the 2000 mark at one stage following the news, before cooling off in later trading.

"In particular a lot of the high-yielding stocks such as Contact and Sky City saw support and also Fisher & Paykel Appliances had a good day."

Contact finished today's session up 7c at 459, Sky City gained 12c rising to 842, and Fisher & Paykel Appliances was up 25c to 1085.

Meanwhile, INL was today notified that Fairfax Holdings had fulfilled the equity funding contractual condition in the heads of agreement for its acquisition of INL's publishing assets.

INL was up 10c to 405 today.

Mr Rutherford said the market today "feels pretty well supported apart from the tourism sector which is obviously suffering along with the whole global sector".

Air New Zealand fell another cent today to 39 following their announcement of reductions to both its profit forecast and international schedules.

Tourism Holdings fell 4c to 91.

Volumes traded today remained "a little bit mediocre", Mr Rutherford said.

" Being a short week there's a lot of players away of course."

In all, 17 million shares with a value of just over $51 million changed hands.

Topping the turnover by value was Telecom which gained 1c to finish at 463.

Among the other 57 stocks to rise were Auckland International Airport up 2c to 499, Baycorp up 4c to 164, Carter Holt Harvey up 4c to 165, Lion Nathan up 10c to 615, Port of Tauranga up 15c to 445, Sky TV up 10c to 400, Steel & Tube up 5c to 330, Telstra up 4c to 465, Tranz Rail up a cent to 43, and The Warehouse up 5c to 555.

Among the 31 falls were Briscoe down a cent to 192, and Sanford down 5c to 545.

There were 132 stocks traded.

- NZPA