The New Zealand share market opened slightly higher on Thursday after receiving a modestly positive lead from Wall Street, where US stocks closed mostly higher overnight despite the Federal Reserve acknowledging in its Beige Book report that the US economic recovery was slowing.
The benchmark NZX 50 index added 5.22 points or 0.17% to 3,166.39 shortly after the market opened on Thursday. Meanwhile, the broader NZX All Capital index collected 4.01 points or 0.13% to be at 3,207.42.
New Zealand's share market ended a five-session string of higher closings with a loss on Wednesday. The benchmark NZX-50 index declined 12.9 points or 0.4 percent at 3,161.2. Trading volume was 39.3 million shares valued at NZ$97.9 million.
Overseas, US stocks rose by solid margins on Wednesday amid some relief buying following news of continued albeit slower U.S. economic recovery as seen by the Federal Reserve and solid demand for Portugal's bond offerings.
In the afternoon, US stocks saw shaky trading but managed to hold on to the bulk of their gains as the Fed's Beige Book stated that the U.S. economy continued its modest expansion, although it noted that a drop-off in the strength of economic data indicated a slower pace of recovery.
The Fed noted that modest economic growth was the most common characterization of overall conditions in the period from mid-July through the end of August. Specifically, the report said consumer spending a saw slight increase on balance, although several districts noted an emphasis on necessities and lower-priced goods. While manufacturing activity also continued to expand, several districts reported a slowdown in the pace of growth.
Early buying interest was generated after the Portuguese government successfully auctioned just over 1 billion euros worth of three and ten-year bonds, with the sales attracting solid demand.
The US markets also digested comments from President Barack Obama, who spoke in Ohio regarding his plan to extend tax cuts for the middle class, increase business tax write-offs, and spend an additional $50 billion on infrastructure projects.
In corporate news, British telecom giant Vodafone Plc (VOD) confirmed that it has agreed to sell its entire 3.2 percent interest in China Mobile for 4.3 billion pounds, or $6.6 billion. Vodafone will continue its commercial and technology cooperation with China Mobile.
Meanwhile, packaged food company General Mills Inc. (GIS) said it expects its first-quarter results to be in line with its expectations and also reaffirmed its fiscal 2011 adjusted earnings forecast.
The major US averages saw considerable volatility in late-session dealing but still managed to close on the upside. The Dow gained 46.32 points or 0.4 percent to end at 10,387.01, the Nasdaq advanced by 19.98 points or 0.9 percent to 2,228.87 and the S&P 500 rose by 7.03 points or 0.6 percent to 1,098.87.
Oil prices rose Wednesday, but gains were tempered after the Federal Reserve acknowledged signs of deceleration in the pace of U.S. economic recovery. October crude oil settled up $0.58 at $74.67 a barrel on the New York Mercantile Exchange, but well off its intraday high of $75.39.
The Energy Information Administration today upped its forecast of global oil demand growth by 50,000 barrels per day from the prior estimate, but revised down next year's growth estimates by 100,000 barrels a day.
The American Petroleum Institute will release its weekly update on oil inventories later this afternoon, followed by the US Energy Department's report Thursday morning. Both the reports are delayed by one day this week, on account of Monday's Labor Day holiday. Analysts expect a build of 1 million barrels in US commercial crude stocks in the week ended September 3.
On the currency front, the New Zealand dollar was buying US72.15c by 8 am on Thursday. In comparison, the kiwi was buying US71.70c at 5pm on Wednesday.
In the economic news for Thursday, data released by Statistics NZ indicated that the value of building construction in New Zealand declined by NZ$10.7 billion or 8.3 percent on year in the June 2010 quarter. The total value of residential construction for the period was down 4.3 percent on year, while non-residential activity was down 13.1 percent, in unadjusted terms.
Statistics NZ said in terms of volume, both residential and non-residential building activity increased in the June quarter, in seasonally adjusted terms. Residential construction volumes were up 10.8 percent while non-residential building volumes were up 5.2 percent.
In a separate report released Thursday, Statistics NZ said the value of manufacturing sales in New Zealand increased in the June 2010 quarter by a seasonally adjusted 3.1 percent.
The agency said the value increase was driven by a 13.9 percent increase in the meat/dairy industry. With that sector excluded, sales values declined 2.2 percent. In terms of volume, manufacturing sales declined 1.8 percent in the June 2010 quarter, with declines recorded in 10 of the 15 surveyed sectors.
In the early trading on the New Zealand stock market on Thursday, second ranked Contact Energy added 0.18% and Fletcher Building, the third best stock, collected 0.12%. Market leader Telecom has halted the trading of its stocks on the NZX pending an announcement from the company.
In the retail sector, Hallenstein Glasson, clothing retailer Kathmandu Holdings and jewelry retailer Michael Hill International remained unchanged, as Pumpkin Patch advanced 0.57% and Warehouse surged 1.09%. Among energy stocks, TrustPower and Vector remained unchanged in the early trading.
Among the dual listed issues, AMP, Australia and NZ Banking Corp, APN News & Media, Telstra and Westpac Bank remained unchanged in the early trading on Thursday morning.
Among other notable stocks, Fisher & Paykel Healthcare gave up 0.66%, Nuplex added 0.59%, New Zealand Oil & Gas advanced 0.78%, Sky City gained 0.70%, Sky Network Television collected 0.59% and Steel & Tube Holdings surged 1.24%, as Fisher & Paykel Appliances, Infratil, New Zealand Refining Company, Mainfreight and NZ Farming Systems remained unchanged.
Meanwhile, Pyne Gould Corporation surged 2.44%, PGG Wrightson plunged 1.75%, Pike River Coal jumped 0.92% and Tower collected 0.54%, as Air New Zealand, Cavalier, Goodman Property Trust, ING Medical Properties Trust, ING Property Trust, NZX Limited, Property for Industry, Rakon and Restaurant Brands remained unchanged.
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