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MARKET CLOSE: NZX ends on a flat note

Friday 16th July 2010

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New Zealand stocks fell, pushing the NZX 50 Index below 3000 as weaker-than-expected US economic data stoked concern global growth may falter. NZ Farming Systems, New Zealand Oil & Gas and Fisher & Paykel Appliances all fell.

The NZX 50 fell 16.6, or 0.6%, to 2,985.8. Within the index 26 stocks fell, seven rose and 17 were unchanged. Turnover was $51.2 million.

The volume of domestic corporate news has reduced in the run-up to the earnings season, meaning investors are giving more weight to overseas developments. The Dow Jones Industrial Average and the Standard & Poor's 500 Index both fell about 0.6% yesterday. In Europe, the FTSE 100 fell 0.8%, France’s CAC 40 dropped 1.4% and Germany’s DAX declined about 1%.

“There is a real dearth of news coming out from companies and most are in the blackout period ahead of reporting season, and we’ve seen quite a noticeable drop in volumes,” ING equity manager Craig Brown says. “In this environment the market particularly susceptible to influence from offshore markets and this is what we’ve seen recently.”

NZ Oil & Gas (NZX: NZO ) fell 3.9% to $1.25 as the market reacted negatively to news that company’s latest drilling venture on the Tui oilfield was approaching target depth with no report yet of commercial quantities of hydrocarbons. This is the company’s second exploration well on the field, the first of which failed to find any commercial reserves.

“The update that (NZOG) are getting close to target depth in the Tui oilfield has taken some off the shine off the shares because it notably didn’t mention any sign of hydrocarbons which you would expect to come gushing out of the well,” Brown said.

Pacing decliners, NZ Farming Systems (NZX: NZS ) fell 4.7% to 41 cents and Fisher & Paykel Appliances (NZX: FPA ) fell 3.6% to 53 cents.

Wealth manager AMP (NZX: AMP ) fell 2.4% to $6.46 after its rival bidder for AXA Asia Pacific, National Australia Bank, said it is in talks with the target company to extend a takeover agreement.

AMP already has Australian and New Zealand regulator approval to acquire AXA, while NAB’s superior offer didn’t get approval, meaning the lender may have to sell assets to win over regulators.

Pyne Gould (NZX: PGC ) fell 2.4% to 40 cents and Pike River Coal (NZX: PRC ) fell 2.1% to 95 cents.

New Zealand Refining (NZX: NZR ) lead the stocks to rise gaining 4.9% to $3.40, and Rakon (NZX: RAK ) rose 1.6% to 93 cents.

Shares in Cavalier (NZX: CAV ) rose 1.6% to $2.50, after the company announced that full-year profit would come in higher than forecast. Profit is expected to be $16.3 million to $16.7 million in the year ended June 30, up from its previous guidance for tax-paid earnings of between $14.5 million and $15.5 million and is as much as 22% up on the previous year’s $13.7 million.

Brown said some of the positive momentum from this news was eroded by tax rules changes, which is expected to reduce profits to an estimate $11 million.

Shares in Air New Zealand (NZX: AIR ) were unchanged at $1.03 after the company quashed media speculation that its proposed alliance with Virgin Blue, which is aimed at cutting costs on the intensely competitive Tasman routes, will involve buying shares in the Australian airline.

PropertyFinance Group, a failed finance company, has been delisted from the NZX after shareholders passed a special resolution to place the company into liquidation. The delisting shares will delisted as of the close of business on July 21.

 

Businesswire.co.nz



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