Richard Drew/AP
Wall Street turned in its biggest one-day decline in months after Fitch Ratings cut the US government credit rating.
The New Zealand sharemarket slipped but held up against declining overseas markets on optimism local interest rates may have peaked.
The benchmark S&P/NZX 50 Index slid 0.2%, or 25.417 points, to 11,936.62 on Thursday. On the broader market 39 stocks rose and 90 fell with $93 million shares traded.
Wall Street turned in its biggest one-day decline in months after Fitch Ratings cut the US government credit rating on Wednesday by one level from its highest AAA to AA+. The agency cited rising debt and a “steady deterioration in standards of governance” after Congress pushed Washington close to defaulting before agreeing to raise the amount it can borrow.
The S&P 500 sank 1.4% to 4513.39, the Dow Jones Industrial Average dropped 1% to 35,282.52, and the Nasdaq composite fell 2.2% to 13,973.45.
Asian stock markets followed Wall Street lower.
The Nikkei 225 in Tokyo tumbled 1.4% to 32,244.08, the Shanghai Composite Index lost 0.2% to 3254.37 and the Hang Seng in Hong Kong retreated 0.5% to 19,429.17. The Kospi in Seoul gave up 0.8% to 2597.36 and Sydney’s S&P-ASX 200 declined 0.5% to 7318.20.
“It was a pretty decent pullback offshore,” said Hobson Wealth Partners investment adviser Brad Gordon. “The New Zealand market has been quite resilient.”
Gordon said employment data on Wednesday gave investors more confidence that interest rates in New Zealand may have peaked.
Stats NZ data showed the unemployment rate edged up to 3.6% in the June quarter from 3.4% in the March quarter, ahead of expectations for 3.5%.
“That employment data probably just suggests that interest rates are done or are getting close to being done in New Zealand,” Gordon said. “We are just seeing a little bit of slack in the economy starting to appear.”
That bolstered the share price of some stocks that are sensitive to interest rate movements.
Meridian Energy rose 1.5% to $5.60, Chorus advanced 0.8% to $8.48, Precinct Property gained 0.4% to $1.32, Vital Healthcare Property Trust lifted 0.9% to $2.35, Property For Industry rose 0.6% to $2.425, and Investore Property jumped 2.8% to $1.45.
Among heavyweight decliners, Fisher & Paykel Healthcare slipped 0.5% to $24.51 while Spark shed 0.3% to $5.165.
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Outside of the benchmark, Scott Technology announced a $12m deal for its automated materials handling system for the Canadian processing facility of McCain Foods, the world’s largest manufacturer of frozen potato products.
Scott Technology chief executive John Kippenberger said McCain had been a customer in Europe for many years and the new deal extended the relationship to North America.
“This new contract is recognition of our expertise in this area, as well as a reflection of our strategy of partnering with companies that have a large global presence,” he said.
McCain director of capital development Mourad Rahimi said the project was part of the largest global investment in McCain Foods’ history, which would double the size, production capacity and workforce at its Coaldale, Alberta processing facility.
Shares in Scott Technology fell 1.2% to $3.36.
Retailer Hallenstein Glasson Holdings dropped 1.9% to $6.19 after the company was censured by the market regulator for not updating the market promptly that the status of its former chief executive Graeme Popplewell had been changed to an independent director, and because it failed to have a majority of independent directors on its Audit Committee for a four-year period from December 2017 to October 2021.
The company was ordered to pay $75,000 to the NZX Discipline Fund, as well as costs and expenses.
– With AP
