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NZ Sharemarket Gains Despite RB Governor's Bleak Outlook

Fuseworks Media
Fuseworks Media

Wellington, June 5 NZPA - The New Zealand sharemarket rose in early trading, despite a bleak picture of the economy painted by Reserve Bank Governor Alan Bollard.

Leaving the Official Cash Rate at 8.25 percent in its 9am announcement, the Reserve Bank said it expected the annual inflation rate to leap to 4.7 percent this year, the highest level in 18 years.

Despite that, Dr Bollard still signalled a cut in interest rates. He expected economic growth to come to a virtual standstill this year, due to household spending hitting the wall, and only modestly recover thereafter.

The New Zealand dollar plummeted after the announcement, losing a cent against the greenback within minutes.

By about 10.10am on the sharemarket the benchmark NZSX-50 index was up 9.16 points to 3566.85. That followed a gain of 17.6 points yesterday after a 2.3 percent plunge on Tuesday.

Despite the early rise today, top stock Telecom was down 3c to 390.

Other leading stock moves included Contact Energy up 5c to 910 and Fletcher Building up 7c to 773. Fisher & Paykel Healthcare added 11c early to 245 while F&P Appliances gained 5c to 235.

Pumpkin Patch was up 2c early to 171, Rakon up 8c to 327, and Sanford up 10c to 490.

Stocks losing ground early included Kiwi Income Property Trust which slipped 4c to 122 and Tourism Holdings which was down 5c to 161.

In the US, blue-chip stocks dipped to close at their lowest since mid-April after Federal Reserve Chairman Ben Bernanke stoked inflation worries and concerns about more credit losses dogged financial shares.

But technology shares snapped back after two down days, helped by some positive brokerage comments on chip makers and data showing unexpected resilience in private-sector employment and the services sector.

The Dow Jones industrial average fell 0.10 percent to end at 12,390.48, while the Standard & Poor's 500 Index inched down 0.03 percent, to 1377.20. The Nasdaq Composite Index gained 0.91 percent to close at 2503.14.

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