8 Jun 2010

Market closes 1.4% down amid global recovery doubts

5:55 pm on 8 June 2010

The benchmark NZX50 Index closed below 3000 on Tuesday after the long weekend, as investors globally worry the global economic recovery is faltering.

It shed 41 points, or 1.4%, to close at 2989 on turnover of $60 million.

ASB Securities broker Stephen Wright says many investors have shied away from the stock market, following heavy losses overseas in the last couple of sessions.

Mr Wright says Tuesday's trading was modest, with many local investors remaining on the sidelines.

The falls included Fletcher Building by 14 cents to $8.04, Telecom by 5 cents to $1.81, and

Auckland Airport by 4 cents to $1.83

Fisher & Paykel Healthcare was unchanged at $3.17 but Fisher & Paykel Appliances fell 3 cents to 52 cents.

Contact Energy went against the tide, up by 3 cents to $5.78.

Sky City Entertainment Group fell 3 cents to $2.87, Sky Network Television fell 5 cents to $4.55 and NZX dropped 5 cents to $1.50.

Other falls included Michael Hill by 4 cents to 66 cents, Pumpkin Patch by 6 cents to $2.04, and The Warehouse by 6 cents to $3.50.

Allied Farmers fell 0.5 cents to 4.6 cents after its finance subsidiary had its credit rating downgraded.

On currency markets, the NZ dollar was at 66.32 US, 81.08 Australian, 45.77 pence, 60.81 yen and 0.5547 euro. The TWI was at 65.4.

Across the Tasman, the ASX 200 index was faring better, up 43 points, or 1 percent, to 4367 in mid-afternoon trading.

On Wall Street, the Dow Jones declined more than 1% on Monday morning, on top of heavier losses on Friday, as investors reacted badly to news that 430,000 jobs were created in May - fewer than analysts had expected.

New Zealand's stock market tends to experience less volatile reactions to events overseas, partly because of its lack of exposure in certain sectors such as banking.

Fears Hungary may default

European Union finance ministers are meeting in Luxembourg amid deepening uncertainty on the markets.

Hungary has just announced a looming debt crisis, prompting fears of a default.

Germany is making the biggest cuts in government spending for more than half a century in a bid to reduce the country's debts. Chancellor Angela Merkel says her country needs to set a good example to avert another crisis in Europe.

British Prime Minister David Cameron has also warned of heavy spending cuts in the country's upcoming budget.