NZ stocks: Market leaps as rates fall

The New Zealand sharemarket leapt today as the Reserve Bank of New Zealand signalled low interest rates are here to stay and after Wall Street rose.

The benchmark NZSX-50 index closed up 40.872 points, or 1.514 per cent, at 2740.585. That was off the session high of 2764.895 but turnover was worth a healthy $148 million.

The ongoing recovery in market leader Telecom was again a theme with $49 million worth of Telecom shares traded. The stock rose 10c to 280.

"It was a good day on the market. Firstly, offshore markets were strong overnight and secondly there was a boost from another interest rate cut," said Grant Williamson, director at Hamilton, Hindin, Greene.

The Reserve Bank today lowered New Zealand's official cash rate 50 basis points to 2.5 per cent and said rates would remain at or below that level until the latter part of 2010.

Mr Williamson said Telecom was continuing a move it had been under going for the past few weeks and its price was now at its highest since October 2008.

Fletcher Building benefited from the interest rate cut and rose 32c to 670.

Property stocks were mixed with Kiwi Income Property Trust up 2c at 93 and Property for Industry up 1c at 111. But ING Property was down 1c at 56, ING Medical Property down 3c at 110, and Goodman Property Trust was unchanged at 80.

Contact Energy eased 8c to 570.

Freightways rose 10c to 290 after releasing a nine-month update that revealed a solid performance but difficult-to-predict business outlook.

NZX rose 25c to 715 after advancing plans to expand into the wholesale electricity market and on the day it held its annual meeting.

Mainfreight rose 18c to 455. NZOG rose 2c to 139 and it revealed it is eyeing offshore markets.

Turners Auctions rose 5c to 70 on the day of its annual meeting.

The Warehouse lifted 9c to 359, Auckland Airport rose 1c to 166, Infratil rose 2c to 157, Nuplex rose 3c to 36, Restaurant Brands rose 1c to 95, and Tower rose 6c to 136.

Speculation today that Chrysler will file for Chapter 11 bankruptcy somewhat clouded the picture in the US, but on Wednesday US stocks climbed after growth data offered hints of future expansion, and the Federal Reserve made hopeful comments.

Gross domestic product dropped at a 6.1 per cent annual rate in the first quarter, but the data showed consumer spending rose and a decline in inventories suggested manufacturers and retailers will have to stock up in merchandise.

The Fed also said the economic outlook had improved modestly since its last meeting in March.

The Dow Jones industrial average rose 168.78 points, or 2.11 per cent, to 8185.73. The Standard & Poor's 500 Index gained 18.48 points, or 2.16 per cent, to 873.64. The Nasdaq Composite Index climbed 38.13 points, or 2.28 per cent, to 1711.94.

- NZPA