NZX 50 flat: Investors cautious ahead of Federal Reserve testimony
- Benchmark S&P/NZX 50 Flat Index
- Slight trading volume of $71.8 million
- Investors ‘cautious’ ahead of Fed testimony
The equity market started the week on a calm tone as investors cautiously await comments from Federal Reserve chief Jerome Powell for clues on the outlook for interest rates.
The benchmark S&P/NZX 50 index oscillated between positive and negative throughout the day, ending down 0.01%, or 0.988 points, at 10,588.20 on Monday. Just $71.8 million worth of shares traded on the benchmark, lagging normal volume of around $150 million.
Powell testifies before the Senate Banking Committee in the United States on Wednesday and Thursday. The U.S. central bank last week hiked its benchmark rate by 75 basis points and investors fear it is eyeing another mega-hike at its next meeting in July, triggering a recession.
“Markets are cautious,” said Peter McIntyre, investment adviser at Craigs Investment Partners. “We’re going to be guided by what Jerome Powell says.”
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McIntyre said Powell’s testimony this week and recession fears will keep the market “on edge.”
The health sector has won. Consumer stocks, financial services, real estate, utilities, technology and industrials sectors fell.
Medical device maker Fisher & Paykel Healthcare rose 2% to $19.48.
The stock has lost 41% this year as demand for its breathing aids slows from unprecedented high levels in the early stages of the Covid-19 pandemic.
McIntyre said investors saw the stock value below $20, noting it was a quality company with strong long-term prospects, which was paying dividends.
Ebos, the largest healthcare retailer in New Zealand and Australia, rose 0.8% to $39.44. Specialty milk distributor The a2 Milk Company gained 0.9% to $4.61. Auckland International Airport rose 1.1% to $7,185. Telecom company Spark rose 1.2% to $4,665.
Meridian Energy gained 0.3% to $4.375, while Genesis Energy rose 1.6% to $2.60.
Transport fleet data firm ERoad fell 3.3% to $1.75.
McIntyre said investors were concerned about the prospects for the company’s U.S. growth plans, given growing worries about a recession.
Vital Healthcare Property Trust fell 3.7% to $2.63, cinema software company Vista Group lost 3.6% to $1.60 and motorhome company Tourism Holdings fell 3% at $2.27.
NZME gained 4.4% to $1.19 after the media company announced it had paused its $30 million share buyback due to slower-than-expected adoption and decided to pay a special dividend of 5 cents per share, equivalent to $9.7 million.
Fletcher Building slid 1.9% to $4.67. Some shareholders of the construction and building materials company have called for the resignation of Chairman Bruce Hassall after what they say were “systematic failures” resulting in a nationwide shortage of its Gib plasterboard.
Simplicity KiwiSaver chief executive Sam Stubbs and NZ Shareholders Association chief executive Oliver Mander, whose members together own 1.4% of Fletcher Building, also called for an independent review of corporate culture and of its risk assessment process, as well as a request for the full board to stand for re-election.
Asian markets were mostly down in cautious trading ahead of a federal holiday in the United States on Monday. Concerns about inflation and the risks of a global recession stemming from the central bank’s efforts to rein it in seemed to outweigh Wall Street’s positive close on Friday.
Australia’s S&P/ASX 200 slipped 0.7% to 6,432.00.
US markets are closed on Monday for the June 16 holiday. On Friday, the S&P 500 rose 0.2% to 3,674.84. The Dow Jones Industrial Average fell 0.1% to 29,888.78, while the Nasdaq composite climbed 1.4% to 10,798.35.
The Russell 2000 Small Stock Index rose 1% to 1,665.69.
– With PA