Market close: US Fed’s fighting talk rattles Kiwi investors

Federal Reserve chairman Jerome Powell said interest rates will be higher than previously expected. Photo / AP

The United States Federal Reserve chair’s fighting talk to keep raising interest rates and beat inflation rattled the markets including New Zealand, which fell nearly one per cent.

The S&P/NZX 50 Index was down 98.48 points or 0.87 per cent to 11,184.3. The index was steady in the morning but it slumped when Australia opened in a weak state. The S&P/ASX 200 Index had fallen 1.76 per cent to 6863.5 points at 6pm NZ time.

There were 96 decliners and 41 gainers on the local market with 39.39 million shares worth $125.01 million changing hands.

The Federal Reserve overnight announced its fourth consecutive 75 basis points hike in interest rates – the sharpest increase in rates since the 1980s. But the Fed did signal the pace of increases may soon slow.

Jerome Powell, Federal Reserve chair, said "we still have some ways to go and incoming data since our last meeting suggests that the ultimate level of interest rates will be higher than previously expected."

The major US indices were down sharply. Dow Jones Industrial Average declined 1.55 per cent to 32,147.76 points; S&P 500 decreased 2.5 per cent to 3759.69; and Nasdaq Composite fell 3.36 per cent to 10,524.8.

Dan Stratful, investment adviser with Forsyth Barr, said there has been a very rapid monetary tightening cycle and the sharemarket is struggling to deal with it.

"It's still full steam ahead to get inflation under control. Our labour market is tight and the general economy isn't showing drastic signs of slowing down, and they are good reasons for putting up interest rates.

"The Reserve Bank may even move to a one per cent increase in the official cash rate later this month. Investors will have to be patient and look to next year for a recovery in shares," Stratful said.

The a2 Milk Company rose 24c or 4.17 per cent to $5.99 after receiving Food and Drug Administration approval to import its Platinum infant milk formula into the United States, which has a supply shortage.

Sales are expected to be up to one million cans in the second half of the 2023 financial year and a2 Milk said its manufacturer Synlait had the capacity to produce nine million cans (equivalent to 211 million 8oz bottles) by the end of June next year. Synlait Milk was up 7c or 2.27 per cent to $3.15.

Briscoe Group gained 9c or 1.83 per cent to $5.01 after reporting a 9.37 increase in total sales to $543.5m for the 39 weeks ending October. Homeware sales grew 8.51 per cent and sporting goods 10.8 per cent, and online now makes up 19 per cent of the group revenue. Total sales for the third quarter increased 26.76 per cent to $175.5m compared with the same period last year.

Stratful said Briscoe's third quarter sales were higher than the pre-Covid period in 2019 and it was a very solid result. "It still shows New Zealanders are spending their money on homeware and not on travel."

Fellow retailers The Warehouse was down 7c or 2.24 per cent to $3.06, and KMD Brands declined 2c or 1.83 to $1.07.

Goodman Property Trust was up 6c or 2.51 per cent to $2.04; Precinct Properties collected 4c or 3.33 per cent to $1.24; Tower gained 1.5c or 2.31 per cent to 66.5c; Private Land and Property increased 3c or 2.75 per cent to $1.06; Trade Window added 5c or 7.58 per cent to 71c, and Bremworth was up 2.5c or 5.43 per cent to 48.5c.

Kiwi Property, up 2.5c or 2.87 per cent to 89.5c, has gained a private plan change to develop a town centre on its 53ha Drury site. Drury is expected to become home to around 60,000 people in the next 30 years.

Fisher and Paykel Healthcare fell 70c or 3.49 per cent to $19.35; Contact Energy lost 11c to $7.33; Mainfreight was down $2 or 2.7 per cent to $72; Ebos Group declined 50c to $37.30; Freightways shed 14c to $9.82; and Infratil was down 25c or 2.86 per cent to $8.48.

Leading banking groups ANZ and Westpac fell 52c or 1.83 per cent to $27.88 and 72c or 2.69 per cent to $26.02 respectively.

Port of Tauranga decreased 6c to $6.34; South Port NZ declined 10c to $8.20; and Napier Port was up 2c to $2.88.

South Port earlier told the market that first quarter trade was in line with expectations. Logs and containers are still being impacted by market conditions but all other bulk cargoes are tracking in line or slightly ahead of the 2022 financial year. Spot freight rates on major sea lanes and charter costs had reduced significantly.

Other decliners were SkyCity Entertainment decreasing 6c or 2.1 per cent to $2.80; Serko down 10c or 3.45 per cent to $2.80; and Marlin Global fund falling 3c or 3.13 per cent to 93c.

Cooks Coffee Company, down 3c or 7.5 per cent to 37c, has completed a dual listing on the London-based Aquis Stock Exchange, and is on track to increase Esquires and Triple Two store numbers by 21 per cent in UK and Ireland.