Market's rocky road not over

The sharemarket's bumpy downhill ride over the past six weeks is likely to extend at least until reporting season next month as the slide in world markets and Telecom's torrid time both continue.

The NZX-50 index closed at 3564.5 yesterday.

Since the start of last month, when US and other markets became particularly volatile, the local market has fallen by 5.7 per cent.

Broker Ken Lister of Forsyth Barr, which late last month predicted the index would fall by 5 to 10 per cent in 12 months, said little had changed in the last month to alter the outlook.

The local volatility was in line with the US and other world markets.

"But regardless of that I think our economy's at a slightly different position. We're likely to have some profit downgrades, which is why we have a slightly cautious tone to things at the moment, whereas the US is likely to see upgrades the way their economy has been going."

Grant Williamson of Hamilton, Hindin, Greene said overseas trends had rubbed off on the local market, "and we can pretty much expect similar volatility going forward for the next wee while".

"Overall it's a softening trend. Prices are just easing back, with a few exceptions, but there's not a lot of news in the market place that's going to turn some of these stocks around."

Stephen Wright of ASB Securities said the other big reason for the local market's decline was its largest company. "Obviously what's wrecking our index is Telecom."

Telecom yesterday plumbed an low for the day of $4.15, just 2c above its three-year low of $4.13, before recovering to end the day 2c lower at $4.22.

"I wouldn't say it's a basket case but it is a problem," said Wright.

With regulators and the media "hooking into" Telecom, "it's difficult to know where that will end".

Williamson said the market's softer tone was likely to continue until reporting season got under way next month.

"A number of companies will have felt the tightening economic conditions and that is going to affect the reporting season, but at the same time a lot of that is getting built into the share prices now.

"I think the surprises might be on the upside where some stocks have been sold off and the companies are actually performing quite well."

Wright expected a mixed bag, "but in general they [results] should be reasonable".

"Because of continuous disclosure, any that are going to be poorer have more or less said their piece already."

Wright also expected corporate activity to support the market.