MARKET CLOSE: Sharemarket flat on global weakness

NZPA

Wednesday 18th May 2011

The New Zealand sharemarket was little changed today after disappointing earnings weighed on the United States market and as investors waited to assess the state of the Government's finance in tomorrow's Budget.

The benchmark NZX-50 index closed up 1.5 points at 3559.553 after opening flat.

Investors are waiting to see the reaction of credit rating agencies to the Government's Budget tomorrow and they are looking to see how credible the forecast return to surplus is.

IG Markets said the Australian government has locked itself in to returning the Federal budget to surplus by 2013, which gives it little flexibility to stimulate under-performing sectors of the economy.

Investors appeared unimpressed with frequency control product manufacturer Rakon's full-year results, cutting the company's share price 7.26 percent to 115.

Rakon (NZX: RAK ) reported a 31 percent rise in full year revenue to $189.3 million as it capitalised on growth in the use of smart wireless devices and data usage across telecommunications networks.

Telecom (NZX: TEL ) shares fell 3.5c early to $2.33 but ended up a cent at $2.37 even though the Government has pulled a regulatory holiday from its ultrafast broadband plan.

Fletcher Building (NZX: FBU ) fell 8c to $9.00 and Contact Energy (NZX: CEN ) was unchanged at $6.01.

DNZ Property (NZX: DNZ ) was unchanged today as it talked up its takeover plan for Argosy Property, while Goodman Property (NZX: GPT ) fell a cent to 95 even though it report higher distributable earnings.

Kiwi Income Property Trust (NZX: KIP ) eased 0.5c to 105 after lifted its full-year distributable income 12.6 percent to $68.8 million. Infratil rose a cent to 195 a day after it reported earnings.

Mainfreight (NZX: MFT ) rose 11c to $9.46, Cavalier (NZX: CAV ) rose 12c to $3.77 and NZX (NZX: NZX ) rose 6c to $2.36.

In the United States, disappointing figures from Wal-Mart and Hewlett-Packard weighed on the market, although a late rebound suggested investors may be looking for a short-term bounce.

Recent weakness in sectors tied to economic growth and the sharp decline in commodities have spurred talk of a prolonged pullback. Short term traders see an opportunity, judging by late gains in certain energy names and financials' strong performance.

The Dow Jones industrial average dropped 0.6 percent to 12,479.58, and the Standard & Poor's 500 Index dropped 0.04 percent to 1328.98, while the Nasdaq Composite Index gained 0.03 percent to 2783.21.

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