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NZ sharemarket follows lead of offshore markets

Contributor:
Fuseworks Media
Fuseworks Media

Wellington, Aug 20 NZPA - The New Zealand sharemarket followed the lead of weak offshore markets today even though there was plenty of local information to trade on with profit reports from Telecom, Contact Energy and Sky Television and others.

Signals continue to be mixed with ANZ seeing "a lot of upside" in New Zealand on a day that Allied Nationwide Finance was placed in receivership after it missed a payment to debenture holders.

The benchmark NZX-50 index closed down 29.382 points, or 0.97 percent, at 3000.404.

"It looks like a bleak finish to the trading week as US economic concerns escalated further," IG Markets said after United States unemployment claims unexpectedly jumped to the highest in nine months and the Philadelphia Fed survey showed weak manufacturing activity.

Adrian Vance, director at Hamilton, Hindin, Greene, said the local market was weak, reflecting the lead from offshore markets and volume was light.

The earnings results today mostly "stacked up" with expectations and the Sky Television result was particularly good.

"There was nothing overly surprising which caught the market on the hop," he said.

Telecom eased 7c to 203 after announcing a 4.5 percent fall in its bottom line net profit to $380 million, with revenue down 6.5 percent to $5.27 billion. But chief executive Paul Reynolds signalled an end to earnings declines, pointing to a fall of 0.2 percent in the company's full year adjusted earnings before interest, tax, depreciation and amortisation.

Contact Energy shed 4c to 578, with its underlying after tax profit down 6 percent to $150m -- impacted by contractual obligations to pay for gas it was unable to use in its gas-fired power stations, while hydro generation reaped the benefits of wet weather.

Sky Television fell 3c to 489 after reporting a rise in profit and signalling plans for the internet.

Allied Farmers was at 2.6c after its finance unit Allied Nationwide Finance was placed in receivership late in the day. A trading halt was lifted at 4.42pm. Mr Vance said the story was likely to be ongoing.

Michael Hill International eased 3c to 66. Its after tax profit slumped 60 percent in the tough retail environment to $26.51 million. Turners Auctions was unchanged at 126 after reporting stronger interim earnings.

Auckland Airport fell 2c to 195. Late in the day it was announced that it faces a legal challenge to its investment in Queenstown Airport.

Fletcher Building, which had posted strong gains after its annual result relieved investors of their worst fears by being in line with expectations, fell 13c to 730.

US stocks tumbled to their lowest close in nearly a month as the latest batch of data amplified concerns the economy is stuck in neutral.

The Dow Jones industrial average dropped 144.33 points, or 1.39 percent, to 10,271.21. The Standard & Poor's 500 Index fell 18.53 points, or 1.69 percent, to 1075.63 for its lowest close since July 21. The Nasdaq Composite Index lost 36.75 points, or 1.66 percent, to 2178.95.

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