Federal Reserve chairman Jerome Powell describes the bank’s latest reduction of the US interest rate as a “risk management cut”. Photo /AFP
The US Federal Reserve’s long-awaited move to cut interest rates has had a subdued impact on the financial markets so far.
The central bank’s lowering of its benchmark rate by quarter of a point to 4%-4.25% – its first cut in about a year – caused barely a ripple on Wall Street.
The Fed’s open market committee voted 11-1 in favour of the cut, with one dissenter, the Donald Trump appointee Stephen Miran, voting for a 50-basis-point reduction.
Updated “dot plot” forecasts showed the Fed is open to further cuts, with two more indicated for this year.
The central bank has a dual mandate supporting maximum employment and price stability.
Federal Reserve chairman Jerome Powell described the bank’s move as a “risk management cut”.
“Powell is saying employment and inflation risks are now more in balance as the job market is starting to cool off in the US,” Salt Funds managing director Matt Goodson said.
“Cautiously dovish is probably the best way to put it, as opposed to a ‘damn the torpedoes, let’s run the economy hot’ type approach, which is clearly what Trump was hoping for,” Goodson said.
“The Fed’s in a very tough position here because they’ve got a dual mandate – unemployment and inflation – and unemployment’s rising and inflation’s ticking up a little bit.
“They’re in a tough place thanks to the stagflationary policies in the US.”
While the local sharemarket has been left in the dust by the world’s major equities markets, it has nevertheless bounced strongly this year.
The S&P/NZX 50 index sits at around 13,200, up 12% from its April low point.
The Reserve Bank cut its Official Cash Rate by 25 basis points to 3% on August 20 and signalled the likelihood that more cuts would follow.
Interest rate market pricing points to the OCR hitting 2.5% by next February.
“The change in Reserve Bank policy stance has been very helpful to the market,” Goodson said.
Harbour Asset Management said there were more positives than negatives to be taken from the latest reporting season for June balance date stocks.
The fund manager said the season was mixed at best, with results generally coming in below expectations and future forecast earnings continuing to be reduced.
“Earnings expectations in aggregate were trimmed mainly due to lower sales/revenue expectations,” Harbour said.
“Costs were relatively stable, although earnings forecasts were reduced in some cases due to rising depreciation resulting from higher capital expenditure. Companies with strong pricing power held up well.
“While earnings forecasts were reduced, there were more positive company outlook statements than negative,” Harbour said.
Craigs Investment Partners has bought Hawke’s Bay wealth management firm Somerset Smith – continuing a trend of consolidation in wealth management.
The agreement brings together nearly a century of financial stewardship from Somerset Smith with the depth and scale of Craigs’ expertise, the company said.
Craigs’ chief executive Simon Tong said the acquisition was an important step towards realising the company’s growth ambitions and made sense for the firm nationally and regionally.
Last month, Alvarium (NZ) Wealth Management Holdings bought Salt Funds Management for an undisclosed sum.
The transaction increased Alvarium’s total assets under advice to more than $4.3 billion, New Zealand-owned Alvarium said.
In July, Forsyth Barr said it had entered into an agreement with Sydney-based private equity firm Mercury Capital, which proposed to buy a stake in the company from existing shareholders.
Forsyth Barr recently acquired Hobson Wealth Partners, further expanding its adviser network and client base.
In June, Australian funds manager and broker Shaw and Partners said it had bought a 75% stake in $7b of funds under management by Auckland-based Investment Services Group, which includes Devon Funds.
New Zealand’s seasonally adjusted current account deficit narrowed by $702 million to $3.4b in the June 2025 quarter, mainly because of Kiwis earning more from their investments overseas, Stats NZ said.
It was the smallest deficit since a $3.1b one in the June 2021 quarter.
“The smaller current account deficit was due to a $1b narrowing of the primary income deficit,” international accounts spokeswoman Viki Ward said.
“This was mainly due to New Zealand investors earning more from their investments abroad.”
New Zealand Green Investment Finance (NZGIF), the Government’s climate investment fund, is making progress in selling down its investments after an edict from the coalition to wind up the scheme.
This week the fund exited its investment in electric vehicle finance and leasing company Carbn after the latter’s management agreed to a buyout backed by financier Private Capital Group.
NZGIF had owned 94.1% of Carbn with its website showing it had made a $42.4m hybrid investment in the company, most of which was debt funding. NZGIF invested $5.8m into buying shares in Carbn in October 2020.
Mobility Holdings, whose directors are Carbn co-founders Shaun Drylie and David Simpson, now owns 95% of the company with 5% owned by New Zealand Private Capital Management.
Drylie is the former CEO of SBS Bank and also previously worked for Commonwealth Bank of Australia and its New Zealand subsidiary ASB. Simpson is an Invercargill-based businessman.
Carbn’s clients include ASB, the University of Waikato, Christchurch City Council and hundreds of other smaller businesses.
The company is also on the All-of-Government panel, enabling central and local government agencies to reduce fleet costs and greenhouse gas emissions.
It owns Zilch Car-Sharing and Sustainable Fleet Financing.
Drylie said the new owners had taken on the debt previously held by NZGIF but wouldn’t comment on how much the management team had paid to buy back the business.
“The purchase arrangements are confidential.”
Out of NZGIF’s total lending of $394.8m it has been paid back $217.5m. An NZGIF spokeswoman this week said it was still working through its final net position.
The investment fund was set up by former Climate Change Minister James Shaw.
It came under fire earlier this year for backing SolarZero shortly before the solar energy company was liquidated.
The Government announced in April the fund would stop making new investments and wind down the portfolio.
Retirement village and aged care firm Oceania Healthcare’s (OCA) recent investor day focused on transparency, sales execution and cash discipline, Forsyth Barr said in a note.
“That said, the handful of numbers provided were only average: enough to underpin the recent modest recovery in the share price, but not enough to create a real buzz on the day,” it said.
“All in all, we view the day as acceptable rather than exceptional.
“The positive is that sales applications have improved dramatically – what OCA has changed appears to be working – but we will likely have to wait until its 2026 result to see this reflected in reported sales growth,” the broker said.
US President Donald Trump has called for US companies to stop reporting quarterly results, adding that a shift to publishing figures twice a year will save them cash and allow executives to focus on their businesses, the Financial Times reports.
Trump issued his call in a post on his Truth Social network on Monday, contrasting standard practice in the US with what he depicted as China’s more long-term approach.
Most publicly listed US companies are required to file quarterly and annual financial filings with the US Securities and Exchange Commission.
Jamie Gray is an Auckland-based journalist, covering the financial markets and the primary sector. He joined the Herald in 2011.