2 Oct 2008

Markets mixed despite US bailout deal

8:35 pm on 2 October 2008

Markets in the Asia-Pacific region were muted on news American lawmakers have approved an amended $US700 billion bailout for the the country's troubled financial sector.

The United States Senate voted 74-25 in favour of the bailout package. It is hoped that the bailout will restore some calm to anxious global credit markets and stock markets worldwide.

But the package must still return to the lower house of the US Congress, the House of Representatives, which voted against an earlier version on Monday.

The New Zealand share market found some relief at the news, finishing slightly higher on Thursday. At the close of trade, the NZX 50 benchmark index was up 44 points, or 1.38%, to 3232 on light turnover of $65 million.

Top stock Telecom was up 3 cents to $2.95. Other market heavyweights Contact Energy was down 6c to $7.88, while Fletcher Building rose 4c to $7.20.

Auckland Airport was up 3c to $2.07. Vector rose 6c to $2.16 and Rakon lifted 7c to $2.39. The Warehouse was down 1c to $3.18.

At 5.20pm on Thursday, the New Zealand dollar was trading at 67.35 US, 85.07 Australian, 38.03 pence, 71.26 yen, and 0.4814 euro. The Trade Weighted Index was 64.61.

Australia and Japan

The Australian share market closed lower on Thursday as many investors sat on the sidelines, waiting to see if the US rescue plan would become law.

At the 1615 AEST close, the benchmark S&P/ASX200 index was down 33.5 points, or 0.7%, at 4761.1, while the broader All Ordinaries index had fallen 40.4 points, or 0.84%, to 4774.1.

At 1630 AEST, the price of gold in Sydney was $US869.90 per fine ounce, down $US7.00 on Wednesday's close of $US876.90.

Japanese share prices closed down 1.88% on Thursday, hitting a three-year low on worries about the financial crisis, despite the US Senate's approval of a bailout for Wall Street.

The Tokyo Stock Exchange's benchmark Nikkei-225 index lost 213.50 points to end at 11,154.76, the lowest point since May 2005.

Wall Street lower

Stocks in the United States ended lower on Wednesday. However, European shares were up.

Investors were already nervous before a Senate vote on the revamped $US700 billion rescue plan for the financial sector.

General Electric was among the top decliners, but the stock cut most of its losses after billionaire Warren Buffett said he planned to invest $US3 billion into the group.

The Dow Jones industrial average ended down 19.59 points, or 0.18%, at 10,831.07. Standard & Poor's 500 Index fell 5.30 points, or 0.45%, to 1,161.06. The Nasdaq Composite Index lost 22.48 points, or 1.07%, to 2,069.40.

The Dow fell by a record 777 points on Monday followed by a rebound on Tuesday that recovered more than half the losses, or 485 points.

European shares ended higher on Wednesday ahead of the US vote. The FTSEurofirst 300 index of top European shares closed 0.9% higher at 1,072.64 points. The index is down about 29% to date this year.

Banks rose the most after recouping some of their recent losses made on uncertainty over the US rescue package. But commodities stocks slipped.

In Britain, the FTSE 100 index closed 1.2% higher at 4,959.59 points. In France the CAC 40 index rose 0.56% to 4,054.54 points, while in Germany the DAX fell 0.42% to 5,806.33 points.