Craigs to buy Somerset Smith Partners; Wall St pauses ahead of Fed meeting

 Craigs Investment Partners has made its first acquisition since building its warchest with TA Associates’ backing, snapping up long-standing Hawke’s Bay wealth management firm Somerset Smith Partners.

Meanwhile, stocks on both sides of the Atlantic took a breather as Federal Reserve policymakers gather for their latest review of monetary policy, which is widely expected to deliver at least a quarter-point cut to the federal funds rate.

Governor Lisa Cook is among those at the federal open market committee after an appeals court rejected President Donald Trump’s bid to remove her, in a split decision to leave a lower court’s injunction in place while she challenges the legality of the move.

Weight-loss drugmakers have caught the eye of the White House’s crackdown on drug advertising, with the Food and Drug Administration issuing a raft of letters to firms including Novo Nordisk, Eli Lilly and telehealth firm Hims & Hers Health.

Countdown to rate cut

Stocks on Wall Street were generally weaker ahead of the US Federal Reserve’s rate decision on Wednesday, which is widely expected to deliver a 25 basis point cut to the federal funds rate.

Governor Lisa Cook was cleared to have her vote counted at the federal open market committee meeting after an appeals court rejected US President Donald Trump’s attempt to fire her over claims of mortgage fraud. The split decision upheld a lower court’s injunction keeping Cook’s position while she challenges the legality of the White House’s ouster.

US Commerce Department figures showed a 0.6% increase in retail sales last month, with no signs of a slowdown emerging even as the job market falters.

“Markets continue to prepare for a dovish Fed policy update in less than 24 hours, with US Treasury yields edging lower and a broadly weaker US dollar, despite stronger than expected US retail sales,” Bank of New Zealand senior markets strategist Jason Wong said in a note. “The euro has been a key beneficiary, rising to a four-year high, while the NZ dollar has edged up towards 60 US cents.”

The kiwi dollar rose to 59.89 US cents at 7am in Auckland from 59.61 cents yesterday and dipped to 50.46 euro cents from 50.62 cents.

The major US stock indices have been at record-highs, and Bank of America’s monthly survey of fund managers showed institutional investors were increasingly overweight in stock markets, even as a record 58% said global stocks were overvalued.

The S&P 500 was marginally lower in late trading while the Nasdaq Composite inched higher, and the Dow Jones Industrial Average slipped 0.2%, with UnitedHealth Group and Nvidia leading the blue-chip index lower.

Not just the Fed

Stock markets in Europe were dragged lower by financial stocks ahead of interest rate reviews from the Fed and Bank of England. The UK’s FTSE 100 fell 0.9% while Germany’s DAX 30 dropped 1.8% and France’s CAC 40 declined 1%.

Telehealth firm Hims & Hers Health dropped 5.4% in late trading as the US Food and Drug Administration sent out a raft of letters to weight-loss drug firms as it steps up enforcement on drug advertising. Denmark’s Novo Nordisk gained 2% and Eli Lilly was up 2.5%, shrugging off the regulatory notices as a study found Novo’s Wegovy drug reduced intrusive thoughts about food, while Eli Lilly said it will build a US$5 billion facility in Virginia.

And Switzerland’s Nestle dipped after saying chair Paul Bulcke will depart at the end of the month, following the abrupt exit of chief executive Laurent Freixe two weeks ago.

The tentative tone is poised to weigh on the antipodes, with Australian futures pointing to a 0.4% decline when the S&P/ASX 200 index starts trading today. Meanwhile, New Zealand’s S&P/NZX50 index has Auckland International Airport and stock market operator NZX shedding rights to their upcoming dividend payments today.

Local data include Statistics New Zealand’s June quarter balance of payments, which is expected to show a narrowing of the current account deficit, and Westpac’s latest consumer confidence survey.

And Tauranga-based investment house Craigs Investment Partners has agreed to buy Hawke’s Bay wealth manager Somerset Smith Partners for an undisclosed sum in its first acquisition since US private equity firm TA Associates came on board earlier this year with a 50% stake. The deal beefs up Craigs’ network to more than 200 advisers across 21 sites, with $35 billion of funds under advice.

Reporting by Paul McBeth. Image from Haberdoedas on Unsplash.