New Zealand market share flat ahead of US inflation data, a2 Milk drops 7%

The New Zealand stock market held steady ahead of US inflation data that could help persuade the Federal Reserve to press ahead with interest rate hikes.

The benchmark S&P/NZX50 index closed virtually unchanged, down one point, at 11,752.09 after gaining 0.4% on Tuesday.

Grant Davies, investment adviser at Hamilton Hindin Greene, said the New Zealand market had weakened a little after the negative advance in US markets overnight, but had generally held up quite well.

The NZX was weighed down by a 7.4% loss in former blue chip a2 Milk, which closed at $5.21.

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The specialty milk distributor has recently gained ground, up 4% since early August, amid speculation it could get approval to sell formula in the United States, which is suffering from a shortage.

Earlier Wednesday, a2 Milk said the U.S. Food and Drug Administration is “currently deferring consideration of the company’s request for enforcement discretion to import infant formula (IMF) products into the States.” -United”.

Disappointed investors sold a2 Milk after dashing hopes of imminent access to the US infant formula market.

123RF

Disappointed investors sold a2 Milk after dashing hopes of imminent access to the US infant formula market.

Davies said analysts covering the stock had pointed out that shipping formula to the United States was not as big of an opportunity as the Chinese market.

“Although it would be good, the company needs to focus on the Chinese market and recover and increase its market share over the years.

“It’s not good news, a 7% drop is never a good day, but in reality, it’s just giving back some of the recent gains on this FDA approval speculation.”

A2 shares were trading above $21 two years ago but fell after the Covid-19 pandemic halted informal shipping of its product to China, known as the daigou trade. In February, the company said first-half profits fell 50% to $59 million and revenue fell 2.5% to $660 million, but it was better than expected.

A2 Milk publishes its annual results on August 29.

Elsewhere on the NZX, Meridian Energy rose 0.1% to $5.25, Fisher & Paykel Healthcare rose 0.7% to $21.60, Auckland Airport lost 0.3% to $7.69 and Mercury Energy jumped 2.2% to $6.55.

Medical cannabis company Cannasouth fell 4.8% to 39c after reporting a disappointing first-half result, including a bigger loss of $3.7m from $1.9m a year earlier.

Fast food franchise operator Restaurant Brands fell 2% to $9.11 and Genesis Energy was down 1.8% to $2.92.

Across the Tasman, Australia’s S&P/ASX200 index fell 0.4% to 7001 by late afternoon trading, as Asian stocks trailed US markets lower.

Earlier on Wall Street, the S&P 500 fell 0.4% to 4122.47 as traders awaited more evidence of how aggressively the Fed may pursue further rate hikes. It was the benchmark’s fourth daily decline after disappointing earnings reports.

A strong labor market is seen as allowing the Fed to raise rates without tipping the US economy into recession.

Marie Altaffer/AP

A strong labor market is seen as allowing the Fed to raise rates without tipping the US economy into recession.

The leading Dow Jones Industrial Index slid 0.2% to close at 32,774.41. The tech-heavy Nasdaq fell 1.2% to 12,493.93.

Data for Wednesday (US time) is expected to show US inflation in July falling from June’s four-decade high of 9.1%.

However, core inflation, which excludes volatile food and energy, is expected to rise slightly. The Fed has raised rates four times this year, including twice by 0.75 percentage points, to slow inflation. Investors expect another 0.75 percentage point rise in September.

A strong labor market is seen as allowing the Fed to raise rates without tipping the U.S. economy into recession, but investors feared the central bank’s efforts could derail global economic growth.

Oil prices have fallen. Brent crude, the price basis for international trade, fell 25 cents to US$96.06 a barrel in London, after falling 34 cents the previous session.

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