NZ sharemarket drops after weak GDP data and US Fed rate cut - Market close

Federal Reserve Chair Jerome Powell has signalled two more potential rate cuts in 2025 after cutting for the first time this year. Photo / Andrew Caballero-Reynolds, AFP

The New Zealand sharemarket fell today following a significantly lower gross domestic product update than expected, while the United States Federal Reserve cut interest rates for the first time in 2025.

The S&P/NZX 50 Index closed down 0.82% or 108.34 points, falling to 13,120.03 after 35.8 million shares worth $127.25m were traded.

The S&P/NZX 20 index closed at 7551.33 points, down 1.07%, while the S&P/NZX 10 index ended the day at 12,607.12, falling 0.91%.

There were 70 gainers on the main board and 64 decliners.

Stats NZ data showed New Zealand’s gross domestic product fell by 0.9% in the June quarter, a reduction well over market expectations of 0.3%-0.4%.

Generate investment specialist Greg Smith said the result underscored the fragility of New Zealand’s recovery, with markets reacting negatively.

“I thought one thing that was interesting was Nicola Willis said ‘We’re past the point of uncertainty’. Well, she said that literally four or five hours after Jerome Powell said there’s still lots of uncertainty,” Smith said.

“These are very lagged numbers and we’ve had a bit more colour since then. If you look at the recent more up-to-date data prints, the manufacturing sector went back into contraction, the housing market is flat at best and the service sector is one of the few in amongst our larger trading peers that is in contraction.”

Smith said the result increased the prospect of a 50 basis point cut to interest rates in October.

Smith said the New Zealand market was weighed down by Infratil, which had its investor day Thursday.

The company said that Australasian data centre operator CDC remains on track to double its FY2025 earnings by FY2027, but confirmed its own FY2026 guidance remains unchanged.

Infratil’s share price fell 3.12% or 39c to $12.11 after 639,279 shares changed hands on turnover worth $7.77m.

Smith suggested the market’s reaction was likely down to the lack of announcements for new contract wins.

Elsewhere gentailers Mercury Energy, Meridian Energy and Genesis Energy all had share price declines.

Mercury saw its share price fall 12c to $6.65, Meridian fell 6c to $5.63, and Genesis fell 2c to $2.37.

Smith said that a rebalancing occurring on the market tomorrow was likely a factor.

Meanwhile, Freightways continued its positive run, with its share price rising 5c to $12.80 after 435,123 shares changed hands on turnover worth $5.5m.

Wall Street stocks finished mixed after the Federal Reserve announced its first interest rate cut of 2025 and signalled it could enact two more cuts this year.

The moves corresponded to market expectations and follow recent economic reports showing weaker job growth that Fed Chair Jerome Powell said justified a greater focus on the Fed’s labour market mandate compared with inflation.

US stocks were choppy after the decision, with the Dow Jones Industrial Average ending up 0.6% at 46,018.32.

The broad-based S&P 500 shed 0.1% to 6600.35, while the tech-rich Nasdaq Composite Index declined 0.3% to 22,261.33.

Based on the projections released Wednesday, Hogan said Fed policy makers appeared to be close to evenly split between those who expect at least two interest rate cuts later this year and those who anticipate one or fewer.

Powell reiterated that additional interest rate actions would depend on upcoming economic data.

– Additional reporting AFP

Tom Raynel is a multimedia business journalist for the Herald, covering small business, retail and tourism.