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NZ sharemarket flat early - despite global weakness

Wednesday 18th May 2011

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Investors appeared unimpressed with frequency control product manufacturer Rakon's full year results, cutting the company's share price 6.5% in the first few minutes of trading on the New Zealand sharemarket.

Despite the 8c drop to $1.16 in Rakon's stock price, and falls in stock markets around the world, the benchmark NZX-50 index was flat in early trading. Around 10.15am the benchmark NZX-50 index was up 0.45 points to 3558.5, after yesterday finishing up 14.2 points.

Rakon(NZX: RAK ) reported a 31% 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, Fletcher Building(NZX: FBU ) fell 3c to $9.05, and Contact Energy(NZX: CEN ) was down 2c to $5.99.

Early risers included Mainfreight(NZX: MFT ) up 5c to $9.40, Cavalier Corp(NZX: CAV ) up 5c to $3.70, and NZX(NZX: NZX ) up 4c to $2.34.

Around the world, stocks were mainly lower, reacting to Europe's debt crisis and data that spurred new doubts about the global economic recovery, although a late pick-up in the euro brought commodities off early lows.

The FTSEurofirst 300 index of top European shares closed down 1% at the lowest close since April 19, as disappointing economic numbers hurt sentiment.

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% to 12,479.58, and the Standard & Poor's 500 Index dropped 0.04% to 1328.98, while the Nasdaq Composite Index gained 0.03% to 2783.21.

NZPA



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