NZ stocks: Wall St's malaise takes toll

The sharemarket fell more than 1 per cent yesterday after the US Federal Reserve delivered a lower-than-expected 50 basis point rate cut, taking official American interest rates to 5 per cent.

"The market was expecting that as a minimum," said Shane Gavegan, of Deutsche Securities.

"They wanted 75 (basis points), so you saw the US market sell off quite significantly.

"That impacted on our market, which was pretty weak today."

In the US, the blue-chip Dow Jones index plunged to its lowest close in nearly two years. The Nasdaq index tumbled 4.8 per cent to 1857.44, hitting its lowest close since November 13, 1998.

But in Tokyo, the Nikkei had its biggest jump in nine years - 7.5 per cent - as investors applauded the Bank of Japan for taking a radical approach to reviving the debt-riddled banking sector.

Locally, the NZSE-40 index, which on Tuesday went up 2.4 per cent to a seven-month high, dropped 27 points, or 1.28 per cent, to close at 2089.52.

Turnover was heavy at $325 million, with solid trade in Fletcher Energy worth $144.95 million, two days before the energy company drops off the board as a result of the Shell takeover.

The market was also weaker as the redistribution of the $4 billion generated through Fletcher Energy's sale draws to a close.

"Some of this buying is getting near its end from Fletcher Energy," Mr Gavegan said.

"The theme over the last few weeks has been talking about how much buying there has been out there - that sort of buying definitely wasn't evident today.

"There comes a time, particularly against the weak backdrop in offshore markets, that perhaps we play a bit of [downwards] catchup because of it," he said.

"We still can't forget that our markets where we export to are quite weak at the moment."

Falls were pretty much across the board, although The Warehouse, led by chief executive Greg Muir, bucked the trend with a 13c rise to $6.25.

Telecom, one of Tuesday's big beneficiaries, slid 25c to $6.02 on turnover of $46.76 million.

Other falls included AMP, down 5c at $24.35, Fisher & Paykel, 25c at $8.25, Sanford, 6c at $6.05 after a big jump on Tuesday, and Tower, 15c at $5.30.

Montana lost 8c to $4.07, INL closed down 19c at $3.70, and Tranz Rail shed 6c to $4.17.

Fletcher Building eased 3c to $2.21. The Commerce Commission yesterday granted a clearance to Building's steel division, Fletcher Steel, to buy Steel & Tube Holdings.

The commission had cleared the purchase in December 1999, but that had expired last December, said Fletcher Building.

The company had no plans to act on the clearance at this stage, it said.

Steel & Tube closed down 1c at $1.48.

Among those to buck the trend, Contact Energy was steady at $3.09, Advantage gained 7c to $1.02, Carter Holt Harvey rose 1c to $1.97, Wellington Drive added 3c to 68c and Auckland International Airport 2c to $3.58.

Fletcher Energy closed up 12c at $9.55 - a sign investors were placing more value on Rubicon, the new Fletcher company set to emerge from the rubble of Energy's sale.

Mr Gavegan said analysts were now picking Rubicon to list at about 30c.

- NZPA