The US gross domestic product for the second quarter increased 2.4 per cent, better than the market expectation of 2 per cent and this reignited fears that the Federal Reserve will keep going with interest rate rises to combat inflation.
Across the Tasman, the S&P/ASX 200 Index was down 0.72 per cent to 7402.3 points at 5.45pm NZ time, with resources and property stocks taking a tumble.
At home, the ANZ-Roy Morgan Consumer Confidence Index was down slightly in July. A net 39 per cent (of respondents) said it’s a bad time to buy a major household item – a 12-point fall and back around its lows.
ANZ Research said that doesn’t bode well for retailers. “A slowdown in consumer spending is under way, and likely has some way to run, given the Reserve Bank views it as a prerequisite for bringing inflation sustainably back down to target.”
Global transport and logistics company Mainfreight declined $1.74 or 2.5 per cent to $67.99 on trade worth $18.21m, after fluctuating between a low of $67.41 and high of $69.50 during the day.
Mainfreight had earlier reported a 19.2 per cent decline in group revenue to $1.18 billion and a 43.3 per cent fall in gross profit to $83.6m for the June quarter because of reduced volumes globally.
Matt Goodson, managing director of Salt Funds Management, said the Mainfreight update was well below market expectation in a number of areas.
“It was a chunky downgrade in earnings but far less in valuation. The analysts had already made significant cuts (in their forecasts) and hadn’t thrown the baby out with the bathwater.
“It’s a hard one to know when the cycle (downturn) will bottom out given all the Covid effects, and I think the market reaction to Mainfreight was measured,” Goodson said.
Cancer diagnostics company Pacific Edge fell 4.2c or 24.56 per cent to 12.9c after the Medicare contractor Novitas again said the Cxbladder testing was “not considered medically reasonable and necessary.”
However, Novitas is allowing Pacific Edge and other affected companies to respond to its latest local coverage determination within 45 days, along with a public meeting on August 11.
Goodson said “I think there was some retail shareholder panic in not understanding the information provided. Nothing has changed for Pacific Edge and it will still be paid by Medicare while Novitas works through the (review) process.”
Fisher and Paykel Healthcare was down 20c to $24.30; Freightways shed 12c to $8.48; Arvida Group decreased 3c or 2.36 per cent to $1.24; Tourism Holdings fell 13c or 3.62 per cent to $3.46; and Restaurant Brands declined 12c or 1.89 per cent to $6.23.
Other decliners were 2 Cheap Cars falling 9c or 14.06 per cent to 55c; Rakon decreasing 2c or 2.63 per cent to 74c; NZME also down 2c or 2.04 per cent to 96c; and Black Pearl Group shedding 5c or 8.47 per cent to 54c.
Ebos Group added 50c to $38.26; Infratil was up 15c to $9.87; Manawa Energy gained 7c to $4.80; Westpac Bank increased 71c or 3.03 per cent to $24.12; and AFT Pharmaceuticals increased 10c or 2.74 per cent to $3.75.
Synlait Milk was up 3c or 1.89 per cent to $1.62; Vista Group increased 6c or 3.33 per cent to $1.86; and Bremworth added 2.5c or 5.56 per cent to 47.5c.
Takeover target Eroad, up 1c to $1.41, provided full-year guidance at its annual meeting of revenue in the range of $175m-$180m, up 6-9 per cent, and operating earnings (ebit) of nil to $5m. Research and development spend in the 2024 financial year will be $30m.
NZ Oil & Gas was up 1c or 2.56 per cent to 40c after the joint venture partners in the Northern Territory Amadeus Basin oil fields upgraded their total reserves Palm Valley, 14 per cent increase to 2.1 million barrels equivalent, and Dingo, up 13 per cent to 3.5 million barrels.
Smartpay Holdings, with 47,000 merchandising terminals in the market, was down 4c or 2.01 per cent to $1.89 after reporting a 39 per cent increase in revenue to $22.6m and 51 per cent rise in operating earnings (ebitda) to $5.3m for the first quarter at its annual meeting. Australia transaction revenue was up 52 per cent to $18.2m.
