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NZ Sharemarket Slumps To 2-1/2 Yr Low After Warehouse Downgrade

Contributor:
Fuseworks Media
Fuseworks Media

By Simon Louisson of NZPA

Wellington, June 27 NZPA - The sharemarket dropped another 1 percent today to a 2-1/2 year low, sparked by a profit downgrade by retailer The Warehouse and a 3 percent plunge on Wall Street.

In the US, stocks tumbled, sending blue chips to a two-year low as oil prices leapt to fresh highs and US sentiment was hit by a barrage of troubling economic and corporate news.

Here, GDP data due today is expected to show the economy went into reverse in the first quarter and is well on its way towards official recession.

The benchmark NZSX-50 was down 42 points to 3249 at 10.20am, its lowest level since December 2005.

The Warehouse dropped 2 percent after the company downgraded its profit guidance by 10 percent after a slump in sales from the latter part of May.

Yesterday, shares in retail retailer Briscoe Group fell 12.7 percent to 96c. They have plunged from $1.70 a year ago but were steady this morning.

The Warehouse shares dropped 8c to 443 and have fallen from 660 in December, but they have been held up on expectations the Court of Appeal will shortly clear the way for supermarket chains Foodstuffs and Woolworths of Australia to launch takeover bids.

The only stock in the top 50 to rise today was oil company NZ Oil & Gas, up 2c to 171.

Among the leaders, Telecom was down 6c to 357, Contact Energy 3c to 847, Fletcher Building 30c to 643.

Selling was across the spectrum but stocks associated with the construction industry were whacked. Among the hardest hit, Nuplex fell 15c to 540, PGG Wrightson 8c to 256, Port of Tauranga 10c to 645, Ebos 13c to 422 and Tower, 5c to 200.

In the US, the blue-chip Dow Jones Industrial Average sank 354.42 points (3 percent) to 11,457.41 at the closing bell.

The technology-heavy Nasdaq composite tumbled 77.36 points (3.22 percent) to 2323.90 and the Standard & Poor's 500 broad-market index retreated 38.11 points (2.88 percent) to a preliminary close of 1283.86.

The market got off to a weak start after a broker downgrade of banking giant Citigroup and tepid forecasts from big tech firms Oracle and Research in Motion as well as sporting goods giant Nike.

The selloff accelerated as crude oil futures surged.

New York's main oil futures contract, light sweet crude for August delivery, closed up a hefty $US5.29 ($NZ7.09) at $US139.64 a barrel, marking a record finish, after topping $US140 for the first time.

NZPA WGT AFP sml nb

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