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Sharemarket falls after commodities sell-off

Friday 6th May 2011

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The New Zealand sharemarket fell in early trade after stocks in the United States fell for a fourth day as a massive sell-off in commodities spilled into other markets.

Around 10.20am the benchmark NZX-50 index was down 10.48 points to 3488.51, after edging up 3.8 points yesterday.

OceanaGold (NZX: OGC ) fell 17c to $3.38, Fletcher Building  (NZX: FBU ) was down 7c to $8.94, Contact Energy (NZX: CEN ) lost 3c to $5.98, Sky TV (NZX: SKT ) dropped 5c to $5.65, Kathmandu (NZX: KMD ) lost 4c to $2.50 and Mainfreight (NZX: MFT ) lost 4c to 49.17. Stocks losing 3c early included Sky City (NZX: SKC ), to $3.58, Trustpower (NZX: TPW ) to 47.40 and The Warehouse (NZX: WHS ) to $3.70.

Telecom (NZX: TEL ) bucked the trend with a 2c rise early to $2.20.5. That followed the company's third quarter trading update in which Telecom lowered its expected capital spending for the current financial year and said capex for the 2012 financial year would be no more than $750 million.

Air New Zealand (NZX: AIR ) also lifted 2c, to $1.14, and Sanford (NZX: SAN ) was up 2c to $5.42.

In the US, oil was the worst performer on the Standard & Poor's 500, with a 2.3% drop after oil suffered the biggest one-day price drop ever for the Brent futures contract, which settled down 8.6% at US$110.80 per barrel.

Adding to a recent spate of poor economic data in the US, weekly applications for unemployment insurance rose to an eight-month high, setting off alarms a day before the April unemployment report.

"It may very well be the case that the commodity price bubble has burst," said Hugh Johnson, chief investment officer of Hugh Johnson Advisors in Albany.

The Dow Jones industrial average dropped 1.1% to 12,584.17, the Standard & Poor's 500 Index fell 0.9% to 1335.10, and the Nasdaq Composite Index lost 0.5% to 2814.72.

 

NZPA



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