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The sharemarket held steady as investors weighed up the implications of the latest interest rate decision in the United States.
The benchmark S&P/NZX 50 Index slipped 0.01%, or 0.625 points, to 11,954.11 on Thursday. On the broader market, stocks were equally split among gainers and decliners, with $92 million shares traded.
It followed similar moves on Wall Street where the S&P 500 slipped 0.71, or less than 0.1%, to 4566.75. The Dow Jones Industrial Average rose 82.05 points, or 0.2%, to 35,520.12, and the Nasdaq composite slipped 17.27, or 0.1%, to 14,127.29.
The Federal Reserve raised interest rates as expected to a range of 5.25% to 5.50% in hopes of wrestling down high inflation. That’s its highest level since 2001 and up from virtually zero early last year.
Fed Chair Jerome Powell said no decision has been made about whether to raise rates at its next meeting or beyond, bolstering hopes among traders that the latest hike could be the last for a long time.
The US economy has so far defied predictions for a recession, largely because of a remarkably solid job market that has allowed households to keep spending. That stoked optimism that the Fed can pull off a “soft landing” for the economy where high inflation falls back to its target without a painful recession.
“The expectation is that there may not be a recession now, and there’s also limited expectation of further rate rises so it’s positive news on that front,” said Hamilton Hindin Greene investment adviser Grant Davies.
“But I suppose the flip side of the lack of recession is their rates may stay a little bit higher for longer as well. So you can’t have it all.”
LAWRENCE SMITH/Stuff
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On the local market, some news emerged as companies held their annual meetings.
Transport and logistics firm Mainfreight told shareholders pre-tax profit fell in the first quarter of this financial year, as slower economic growth reduced volumes, freight congestion unravelled, there was a swift reduction in sea and air freight rates, and due to inflationary pressures in all markets.
The company said pre-tax profit slumped 43% to $83m in the three months to the end of June, as revenue fell 19% to $1.19 billion.
Mainfreight is coming off a period of record profits during the pandemic, and has previously warned activity had started to slow.
The company’s shares fell 2.9% to $69.73.
Ryman Healthcare edged up 0.2% to $6.83 after the retirement village company held its annual meeting.
Interim chairperson Claire Higgins acknowledged the company’s shareholder returns had been “unsatisfactory” and pledged to do better.
Chief executive Richard Umbers said the company remained cautious about market conditions and was particularly mindful of the lagged impact high interest rates could have on the housing market.
As a result, Ryman pulled back its development plans for this year. The company said it expected to increase retirement village units and aged care beds towards the lower end of its 750 to 800 forecast range for this financial year, down from 821 last year.
Ryman didn’t pay a final dividend last year as it faced a big debt repayment. Higgins said the board is reviewing its dividend policy and would update shareholders at the release of its first-half results in November.
Pacific Edge dropped 10% to 17.1 cents.
Shares in the cancer diagnostics company have lost two thirds of their value this year after the company revealed its Cxbladder tests may lose their prized Medicare insurance coverage.
The company told shareholders at its annual meeting that it expects to manage cash reserves in the event of an adverse Medicare coverage decision until it regains coverage – a process it would expect to take around four years.
MHM Automation rose 3.6% to 87c after the company released a positive trading update for the year to the end of June.
Revenue was expected to lift to $90m from $68m and profit before interest, tax, depreciation and amortisation would jump to about $9m from $4.8m, the company said.
MHM said it has had strong workflows across all parts of our group, and the results included two months of trading from its Wyma acquisition.
– With AP
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