MARKET CLOSE: NZX 50 snaps 6-day advance, GPG drops

Wednesday 7th January 2009

New Zealand's NZX 50 Index fell, snapping a six-day rally, after Guinness Peat Group said profit would miss its target and a survey showing a slump in employment sentiment underlined the weak state of the economy.

The NZX 50 fell 19.138, or 0.7%, to 2764.242. Within the index, 19 stocks fell, 18 rose and 13 were unchanged, with some 20.7 million shares changing hands. Guinness Peat fell 5.8% to 98 cents after chairman Ron Brierley said
2008 profit was hurt by the worldwide economic downturn, which eroded earnings and reduced the value of its share portfolio.

Fisher & Paykel Appliances fell 2.2% to NZ$1.36 as the New Zealand dollar strengthened and prices of raw materials rose. The Reuters/Jefferies CRB Index of 19 raw materials climbed 2.8% yesterday.

The New Zealand dollar recently traded at 59.70 U.S. cents, having climbed from less than 52 cents in early December. A rising currency trims returns for exporters. Fisher & Paykel Healthcare, which gets more than two third of its revenue in U.S. dollars, fell 3.7% to NZ$3.19.

Pike River Coal rose 5.2% to NZ$1.01, leading the NZX 50 higher, as commodity prices rose and shares of the world's biggest miners rallied.

Rio Tinto rose 7.4% to A$46.61 in late afternoon trading on the ASX in Sydney. BHP Billiton, the world's biggest mining company, climbed 2.5% to A$32.48.

The S&P/ASX 200 Index rose 1% to 3781.4. Babcock & Brown jumped 15% to 11.5 cents.

In New Zealand today, the Westpac McDermott Miller employment confidence index tumbled 17.2 points to 104, the lowest in the history of the series in a sign that the recession may continue to bite this year, with rising unemployment. The jobless rate may peak at almost 6% in 2009, from a five-year high 4.2% now, according to Westpac senior economist Donna Purdue.

"The economy has been in recession for the best part of a year and now firms are facing the prospect of a deep recession in 2009," Purdue said.

Transport and logistics firm Freightways fell 4.1% to NZ$3.06 and Mainfreight dropped 2% to NZ$4.80. Steel & Tube Holdings, which supplies steel building products, fell 2% to NZ$3.15.

Warehouse Group rose about 2% to NZ$3.65 in its second daily gain after managing director Ian Morrice said margins were "at levels similar to last year" as the retailer cut costs and improved management of stock levels. First-half earnings before one-time items would about match last year's NZ$56.8 million, he said.

In Tokyo, the Nikkei 225 Index rose 1.9% to 9250.70 in early afternoon trading amid speculation U.S. President-elect Barack Obama's plan for a two-year, US$775 billion economic recovery and reinvestment package will stoke demand in Japan's biggest export market. Honda Motor gained 9.5% and Isuzu Motors climbed 13%.

By Jonathan Underhill

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