Market commentary

WELLINGTON: New Zealand shares were down nearly 0.5% at the start of another uncertain week yesterday.

The S&P/NZX 50 reached a morning high of 11,620.85 but dropped sharply in the afternoon, closing down 48.47 points or 0.42% to 11,531.99.

There were 57 gainers and 86 decliners over the whole market on very light volume of 18.9 million share transactions worth $72.28 million.

Transport company FedEx, a United States benchmark stock, sent shivers through the markets at the weekend by signalling a sharp downgrade in quarterly earnings, and investors soon wondered whether the economy was in fact going into a recession.

The US Federal Reserve is meeting on Thursday and is expected to hike its official rate another 75 points to combat inflation.

The slowdown in parcel and cargo deliveries meant FedEx is expecting earnings per share to fall 19% to $US3.33 ($NZ5.57) in the first quarter, compared with the previous corresponding period, and some distance from its forecast of $US5.14.

The air division missed its own quarterly revenue forecasts by some $US500 million. FedEx is closing 90 offices, putting in a hiring freeze, reducing flights and grounding aircraft.

FedEx shares plunged more than 21% to $US161.02, the biggest oneday drop since it listed in 1978.

The transport and logistics sector was shaken. At home, Freightways declined 25c or 2.31% to $10.57, and Mainfreight was down $1 to $71.50.

Shane Solly, portfolio manager with Harbour Asset Management, said FedEx was a bellwether stock and sensitive to any slowing in the economy.

‘‘We’ve seen the sector come off globally, but I expect Mainfreight and Freightways to be more resilient given their mix of business is different. They should weather any slowdown much better,’’ he said.

‘‘The market at the moment is just a little wary and focused on the macroeconomic activity.’’

Ryman Healthcare gained 10c to $9.05. Mr Solly said prices for their retirement units were still increasing and its business was holding up well. —