China boosts NZ dollar, US markets, Hart's Reynolds posts loss
Gareth Vaughan, sitting in for Bernard Hickey, details key news overnight in 90 seconds at 9 am in association with the BNZ, including news that news out of China has boosted the New Zealand dollar.
China labelled a Financial Times report that suggested it was considering selling its holdings of euro assets as “groundless.” This helped boost demand for currencies such as the Australian and New Zealand dollar. The Kiwi rose to US68.20 cents from US 66.75c yesterday.
It was also helped by yesterday’s April trade data that showied the country’s first annual surplus since July 2002, of NZ$161 million, for the year to April. The April monthly figure, boosted by exports of dairy and forestry products, showed a monthly surplus of NZ$656 million, easily outstripping economists’ expectations for a surplus of NZ$450 million.
The news out of China also helped boost US sharemarkets with the Dow Jones industrial average, Standard & Poor’s 500 index and the Nasdaq all up strongly.
This was despite data showing the US economy grew slightly slower than expected in the first quarter. US gross domestic product expanded at a 3 percent annual rate, slightly below initial official estimates of 3.2 percent.
Graeme Hart’s Reynolds Group Holdings, the holding company for the bulk of New Zealand’s richest man’s packaging empire, posted a 47.6 million euros (NZ$85.9 million) loss for the three months to March. Reynolds, whose packaging interests are spread from Whakatane to Nepal, to South America, Europe and the United States, managed to increase revenue by 10 million euros to 685.3 million euros.
However, increased raw material costs and a 107%, or 60.6 million euros rise in financial expenses, driven by higher foreign exchange losses and increased interest payments on the group’s debt, saw financial expenses climb to 117.2 million euros.
Reynolds, which recently issued nearly US$2 billion worth of junk bonds to raise funds to help consolidate Hart’s empire, now has total debt of 4.5 billion euros or NZ$8.1 billion. The company also highlighted its Reynolds Consumer arm, the dominant US maker of foil, wraps and bags used for food storage and preparation, would exit unprofitable markets and product lines.
In March Forbes Magazine ranked Hart Australasia's richest man for the second straight year, estimating his fortune at US$5.3 billion.
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