Antipodes wake up to renewed optimism for Middle East deal

New Zealand markets start the week with mixed cues after Wall Street extended its rally for an eighth week while Australian futures are pointing to a soft opening for the ASX as they weigh the prospect of the US reaching a peace deal with Iran.

The local calendar is busy with the Reserve Bank reviewing policy on Wednesday and finance minister Nicola Willis unveiling her budget the following day, while local heavyweights including Fisher & Paykel Healthcare, Infratil and Mainfreight report their respective earnings this week.

Bladder cancer test maker Pacific Edge and fleet management tech firm Eroad are first out of the blocks this week, with the biotech firm’s draft re-coverage by the US Medicare programme putting it back in investors’ good books.

And Rakon will mark its final day of trading on the NZX today ahead of its delisting on Wednesday after Bourns’ successful $356 million takeover of the high-tech components maker.

Pushed and pulled

Wall Street set a strong lead for the antipodean markets after the S&P 500 notched up its eighth straight weekly gain in its longest winning streak since 2023 as semiconductor stocks and tech firms continued their bullish run. The S&P 500 was up 0.4% on Friday and the Nasdaq Composite advanced 0.2%, with the Dow Jones Industrial Average’s 0.6% gain led by Merck & Co, Salesforce and Cisco Systems.

Meanwhile, US President Donald Trump talked up the prospect of a peace deal with Iran over the weekend before walking back his comments to say he wouldn’t be rushed, with the question of the Islamic Republic’s nuclear ambitions remaining vexed.

The Polymarket prediction market was pricing in a 28% chance of a permanent deal being reached by the end of May and a 51% chance by the end of June, while Brent crude oil futures were up 1.3% at US$103.94 a barrel.

“New Zealand equities are expected to begin the week on a firmer note after Wall Street closed higher on Friday and hopes of a US-Iran agreement continued to ease inflation and oil price concerns globally,” Moomoo market strategy consultant Greg Boland said in a note.

“US markets are closed tonight for the Memorial Day holiday, creating a quieter start to the trading week, while volatility also eased further with the VIX falling to 16.7,” he said, referring to the volatility index.

Busy week

The kiwi dollar fell to 58.50 US cents at 7am in Auckland from 58.75 cents last week, and Australian futures pointed to a 0.7% decline for the S&P/ASX 200 index when trading opens across the Tasman.

The local calendar is a busy one, with the Reserve Bank expected to keep the official cash rate at 2.25% at Wednesday’s review, and the government’s budget being released the following day.

The Middle East conflict and ensuing energy shock will make the forecasts murkier than usual, with the high degree of uncertainty in the global environment.

Meanwhile, earnings are due through the week from F&P Healthcare, Ryman Healthcare, Mainfreight, Goodman New Zealand, and Infratil, along with a clutch of smaller companies as well.

Pacific Edge and Eroad are due to report their respective earnings today, while Rakon shares will be suspended from trading at the close of trading ahead of its delisting on Wednesday.

Reporting by Paul McBeth. Image from Casey Horner on Unsplash.