Overseas markets offer positive news for NZ

The New Zealand sharemarket had its second gain of the week yesterday following strong rebounds in overseas exchanges and further economic stimulus in China.

The S&P/NZX 50 Index closed at 11,347.73, up 34.2 points or 0.30 per cent. The index finished flat for the week and is down 1.1 per cent for the year so far.

There were 87 gainers and 31 decliners on the main board. Trading was extended for the quarterly rebalance of the NZX and FTSE Russell Indices, and by the end of the day 128.64 million shares worth $364.97m changed hands.

In the United States, the Dow Jones Industrial Average had its best day since August 7, rising 0.96 per cent to

34,907.11 points. The S&P 500 was up

0.84 per cent to 4505.10 points and the Nasdaq Composite increased 0.81 per cent to 13,926.05.

In the first major initial public offering for nearly two years, chip design company Arm Holdings jumped nearly 25 per cent on its first day of listing, rising from US$51 to US$63.59. There was also plenty of solid economic news. The US Producer Price Index rose 0.7 per cent, ahead of the market expectation of 0.4 per cent and the biggest monthly gain since June last year. On an annual basis, the cost of producing goods and services was up 1.6 per cent.

Retail sales were also above expectations, rising 0.6 per cent in August compared with the previous month. The market expected 0.1 per cent. The employment market remains strong. Commentators say US consumers are proving relatively resilient to cost-of-living pressures.

Shane Solly, portfolio manager with Harbour Asset Management, said Chinese authorities have cut the cash rate used as a reference point for lending, with banks providing more liquidity.

“Latest numbers have shown that

China’s economy slowly improved in August, and this has helped sentiment. And inflation in the US is not as bad as some people thought,” he said.

The Hong Kong Hang Seng Index had risen 0.97 per cent to 18,233.43 points at 6pm NZ time, and the S&P/ ASX 200 Index had increased 1.35 per cent to 7283.4.

At home, Skellerup Holdings ,up 15c or 3.23 per cent to $4.80, Tourism

Holdings, gaining 3c to $3.73, KMD Brands, unchanged at 78c, and Pacific Edge, increasing 0.6c or 5 per cent to 12.6c, are being removed from the FTSE Russell indices.

A dozen stocks had their weightings changed on the NZX, while Meridian, gaining 7c to $5.36, and Vulcan Steel, up 19c or 2.12 per cent to $9.15, were affected on the ASX.