NZX CLOSE: NZ shares fall as global optimism dips; Nuplex falls

Monday 5th October 2009

New Zealand shares fell for a second day amid concern equity markets globally have run too hard, given the prospects of a tepid economic recovery. Manufacturers including specialty chemicals maker Nuplex Industries and carpet maker Cavalier Corp. paced the decline.

The NZX 50 Index slipped 10.13, or 0.3%, to 3138.72, adding to Friday’s 1.1% decline. Within the index, 25 stocks declined, 17 rose and eight were unchanged. Turnover was $68 million.

Stocks fell across Asia today, following declines in Europe and the U.S. on Friday on data showing American companies shed more than forecast jobs while factory orders unexpectedly declined. The weaker figures stoked concern that the Standard & Poor’s 500 Index’s 57% rally from its low in March had pushed valuations too high as investors await results of the third-quarter earnings season.

“I’m still very nervous about 2010,” said Ian Waddell, head of stock broking at McDouall Stuart. “The major thing looming is the U.S. reporting season – comments about what their order books are like are critical.”

Nuplex fell 4% to $2.32, leading the index lower. Cavalier declined 2.6% to $2.60.

Hallenstein Glasson Holdings fell 2.8% to $2.80. Last month the owner of the men’s and women’s clothing chains confirmed a slump in its annual profit and said it was too difficult to provide guidance for the current year. The battle for sales in a tight market had eroded margins it said.

Westpac Banking Corp. led declines in Australian banks that trade on the NZX, falling 2.8% to $30.05. Australia & New Zealand Banking Group fell 2.6% to $28. Insurer AMP Ltd. declined 3.2% to $7.36.

Banks were among the biggest decliners on Australia’s S&P/ASX 200 Index today, amid speculation the Reserve Bank of Australia is preparing to raise interest rates.

Warehouse Group, the biggest retailer on the NZX 50, gained 1.2% to 4.25 and Michael Hill International gained 2.9% to 70 cents.

For retailers, “so much is going to turn on what the Christmas season is like,” Waddell said. “That becomes quite critical to the process.” An early indicator may be Thanksgiving weekend in the U.S.

NZ Farming Systems Uruguay climbed about 7% to 46 cents, the biggest gain on the index, after ANZ Bank's monthly Commodity Price Index had its strongest upwards bounce in 22 years, with a 6.8% surge in prices for the month of September. The gains were led by a 17% increase in dairy prices.

Methven Ltd. fell 2.4% to $1.66 as the U.S. dollar held around 72 U.S. cents, denting the value of overseas revenue.

“The currency still persists in staying up there,” Waddell said. “That makes it a pretty unattractive proposition for the foreigners.”

Businesswire.co.nz

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