MARKET CLOSE: Sharemarket rises slightly at time of volatility

Friday 6th May 2011

The New Zealand sharemarket rose today even though the United States market fell for a fourth day as a massive sell-off in commodities spilled into other markets.

The benchmark NZX-50 index closed up 7.368 points, or 0.211%, at 3506.353.

"Across Asia, regional markets are all lower following the big sell off in commodities prices overnight and the weak equities lead from New York. This sent traders to the sidelines ahead of tonight's key US jobs report," Ben Potter at IG Markets said.

There was a lot for investors to absorb with Telecom issuing a trading update, the Electricity Authority intervening to correct a price spike in the electricity market on March 26 and mobile phone users on watch to see if prices fall after the Commerce Commission intervened to set inter-connection charges.

Oil prices inched above US$100 (NZ$126.80) a barrel in Asia, consolidating after a sharp drop in earlier time zones.

Methven (NZX: MVN ) fell 7c to $1.44 as it gave further guidance on the impact of the receivership of a UK customer representing 5% of its sales.

Bathurst Resources (NZX: BTU ) fell 3c to $1.49 after signing up China's Citic as a lender and customer for its Buller Coal Project.

Fletcher Building (NZX: FBU ) fell 5c to $8.96, while SkyCity (NZX: SKC ) rose 7c to $4.48 and Sanford (NZX: SAN ) rose 15c to 55.

Telecom (NZX: TEL ) rose 3c to $2.21.5 after it 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.

The listed power companies are yet to comment on the Electricity Authority move but business groups welcomed the intervention in the wholesale market.

Contact Energy (NZX: CEN ) eased 4c to $5.97 and TrustPower (NZX: TPW ) rose 2c to $2.50. Infratil (NZX: IFT ) rose 1c to $1.91.

Ebos (NZX: EBO ) fell 1c to $7.34 and Vital Healthcare (NZX: VHP ) rose 1c to $1.15.

OceanaGold (NZX: OGC ) fell 15c to $3.40 and NZ Refining (NZX: NZR ) rose 7c to $4.48. NZOG (NZX: NZO ) rose 1c to 97.

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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