Stock market ‘good start’ in the second half after decline in the first half

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• Benchmark S&P/NZX 50 Index gains 0.51%
• Shares recover from slump in first half
• Fed officials said the US could avoid a recession

The stock market ended the week on a positive note, recovering from a beating of the past six months.

The benchmark S&P/NZX 50 Index gained 0.51% or 57,076 points to 11,169.24 points on Friday. In the broader market, 96 stocks gained and 34 fell, trading $94 million worth of shares.

The benchmark is up 2.8% so far this month, after a loss of 16.6% in the first half of the year. Equity markets around the world fell in the first half while central banks are aggressively raising interest rates to curb inflation, which has proved more persistent than expected following economic stimulus during the pandemic.

“We got off to a good start into the second half of the year after a deep sell-off in the first six months, so maybe there’s a bit of optimism that sales are overblown,” said Greg Smith, chief of retail at Devon Funds Management.

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“If you have a deep sell-off, like we have in the first six months, more often than not the market will bounce back depending on how the economic situation develops.”

Investors await the Reserve Bank’s decision on interest rates next week.

Smith said the central bank is expected to raise official spot interest rates by 50 basis points to slow inflation and investors would like to hear how the bank was tracking the economy and also the outlook for future interest rates.

“The markets have priced in the worst and if the worst is not forthcoming, we’re going to have a snapback,” Smith said.

Some investors may see value in weaker stock prices and “buy the dip,” he said.

“Many companies are cheaper than they were six months ago, but their prospects probably haven’t deteriorated as much,” he said.

Pushpay was the largest stock traded by volume and value on Friday. Shares gained 1.6% to $1.30 after the digital church payment service announced Thursday it had added the Archdiocese of Seattle, Washington, in the United States as a Catholic customer.

Pushpay counts more than half of the top 100 churches in the US among its customers, and focuses on Catholic parishes for growthwith the ability to reach 174 parishes and a Catholic population of over 600,000 people.

“They’re expanding into the Catholic segment in the US — that’s the next big step and big market opportunity,” Smith said.

Transportation fleet data company, Erad, rose 5.3% to $2.19, bringing profits to 49% so far this week. Its share has fallen 58% so far this year and that of the company chairman Graham Stuart recently bought 35,000 shares for $52,657, bringing his holdings to 105,000 shares.

Napier Port rose 0.7% to $2.80. Chief executive Todd Dawson said he was pleased with the improvement in trading volumes in the third quarter after a challenging start to the first half of the fiscal year.

Volumes for the quarter were broadly in line with the previous year, indicating a reduction in some of the additional pressure the company faced earlier in the year, he said.

Container freight volume increased by 1.5% and bulk freight volume decreased by 2% compared to the same period last year, the company said.

Casino operator SkyCity Entertainment Group was the biggest loser in the market, down 6.2% to $2.58. Shares have fallen 12% this week after the company said South Australian authorities had announced an investigation into the Adelaide casino as part of a widespread investigation into the Australian casino industry.

“Investors are trying to figure out what that means,” Smith says. He noted that the Adelaide casino was only a small part of SkyCity’s business.

Elsewhere, Asian stock markets have followed Wall Street higher after two Federal Reserve officials said the US economy could avoid a recession and news reports said China could boost construction spending to boost the struggling economy.

Tokyo’s main stock index gave up some of its gains after the shooting of a former Japanese prime minister, Shinzo Abe, but remained positive throughout the day.

Shanghai, Hong Kong and Sydney also made progress.

Wall Street’s benchmark S&P 500 index rose 1.5% on Thursday after James Bullard, a member of the Fed’s rate-setting panel, said a “soft landing” for the economy was the most likely scenario. Another panelist, Christopher Waller, said “the fear of a recession is overblown”.

– With AP