24 Jan 2014

Dollar mixed while shares fall

7:00 pm on 24 January 2014

The New Zealand dollar was mixed, little changed against the US dollar, briefly hitting a fresh eight-year high against the Australian dollar but falling marginally against other currencies.

Rankin Treasury managing director Derek Rankin said weak Chinese manufacturing data which showed the Chinese economy was slowing was weighing on the Australian dollar. As well, the currencies of some of the emerging markets were under pressure.

"The Australian dollar is, if you like, a bit of a proxy for China and emerging markets, so the Australian dollar came under some selling pressure as a result," Mr Rankin said.

Just after 5pm, the New Zealand dollar was buying 94.51 Australian cents after rising as high as 94.95 cents earlier on Friday, and compared with 94.12 on Thursday.

It was also trading at 82.8 US cents, 49.78 pence, 0.6050 euro and 85.68 yen.

Investors pause

The share market fell for the second day, the NZX Top 50 Index dropping 37 points to 4874.

Asian shares also lurched to a four month low extending the previous day's weakness as disappointing Chinese manufacturing data raised concerns over the economy, and investors sought safety in gold and the yen.

Macquarie Private Wealth advisor Campbell Johnstone said investors could be taking a pause after a rally earlier this month.

But he said it had to be looked at in the context of a market high on 22 January, which was a rally of 4.5 percent from the end of December.

Market enthusiasm had probably waned a little, couple with number of companies such as The Warehouse and Hallenstein Glasson giving lower earnings guidance.

"So investors just pausing to reflect on what the valuations are following the strong rally earlier this month," Mr Johnstone said.

Among the movers on Friday was Vector, which added more than 2200 electricity customers in the six months ended December. That took its total electricity customer numbers to more than 540,000, up 0.8 percent on a year earlier.

Vector shares closed up 6 cents to $2.58.