MARKET CLOSE: Stocks snap 3-day rally; FPA, GPG fall

Tuesday 7th April 2009

Shares snapped a three-day rally after a survey showed business activity at a 39-year low and Wall Street weakened on renewed concern about the financial sector.

The NZX 50 Index fell 20.97, or 0.8%, to 2612.47.Within the index, 30 stocks fell, 12 rose and eight were unchanged. Turnover was a better-than-average NZ$98.1 million.

Companies that rely on overseas earnings were among the biggest decliners. Guinness Peat Group, which owns the U.K.-based Coats threadmaker business, fell 7% to 65 cents, leading the index lower. Fisher & Paykel Appliances, which makes sales in Europe, North America and Asia, dropped 6.4% to 44 cents and Nuplex Industries, the specialty chemicals maker, fell 6.1% to 31 cents.

Rakon, manufacturer of components for navigation systems, declined 3.9% to $1.22. Fisher & Paykel Healthcare, which gets about 80% of its revenue in U.S. dollars, fell 4.1% to $2.82 as the kiwi dollar held above 58 U.S. cents.

Fletcher Building declined 0.8% to $6.15 after a report from the Australian Industry Group and Housing Industry Association showed that nation's construction sector contracted for the 13th straight month in March. Australian rival Boral fell 2.8% to A$3.82 on the ASX. CSR declined about 3% to A$1.31.

New Zealand business activity weakened in the first quarter, with the number companies reporting a fall in trading reaching the worst level since at least 1970, according to the New Zealand Institute of Economic Research's Quarterly Survey of Business Opinion. A net 47% of firms recorded a fall in their activity in the March quarter and a net 65% of respondents see economic conditions deteriorating over the next six months.

Among other shares to fall, Ryman Healthcare slipped 4.8% to $1.40 and Sky City Entertainment Group dropped 3.5% to $2.75.

"Profits remain under heavy downward pressure," said Craig Ebert, senior economist at Bank of New Zealand. "Its not until these turn up that we can presume the business sector is genuinely on the mend. In the meantime, brace for more bad profit reports, which obviously won't be good new for the NZ equity market," he said.

The value of trade on the NZX fell 29% to $1.85 billion last month, the market operator said in a statement today. NZX's own shares fell 2.3% to $6.85.

Shares of Australian companies and those with significant revenue across the Tasman led gainers today.

Telstra, Australia's largest phone company, rose 6.5% to $4.10 on the NZX after it won a reprieve in the race to roll out that nation's high-speed phone network. Australia's federal government today said Telstra will be allowed to invest in the broadband network after it was earlier disqualified from the tender process. Telstra jumped 4.7% on the ASX today.

Brewer Lion Nathan gained 4.1% to $9.89, Goodman Fielder advanced 3.9% to $1.34 and Westpac Banking Corp. climbed 2.6% to $25.50.

The Reserve Bank of Australia cut its benchmark interest rate by a quarter point to 3% today, surprising some economists, saying there's evidence that the global economic contraction continued into the first few months of 2009. The RBA's rate is now at its lowest in 49 years.

Still, the S&P/ASX 200 Index slipped 1.2% to 3712 in late afternoon trading, weighed down by tumbling resource stocks.

Rio Tinto fell 9.5% to A$53.49 after the world's third-largest mining company said it will cut production at its Weipa bauxite mine and slow development of its Yarwun alumina refinery because of sliding prices. Investors are speculating that Rio will sell shares if the sale of assets to Aluminum Corp. of China falls through.

BHP Billiton dropped about 4% to A$32.65 and Bluescope Steel declined 8.4% to A$2.83.

Businesswire.co.nz

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