Big Wednesday lands as RBNZ rate review, F&P earnings loom

It’s Big Wednesday in New Zealand with the Reserve Bank’s last monetary policy statement of the year expected to deliver another cut to the benchmark interest rate, while analysts have pencilled in a strong result for NZX heavyweight Fisher & Paykel Healthcare’s first-half earnings.

Meanwhile, stocks on Wall Street continued their recovery with retailers including Home Depot and Walmart leading the Dow Jones Industrial Average higher after chain stores such as Kohl’s and Best Buy raised their annual outlooks ahead of the all-important Black Friday sales period, and helping allay concerns about softer-than-expected consumer spending data.

The tech-heavy Nasdaq Composite’s gains were more modest as Nvidia sank amid reports Meta Platforms is talks to spend billions on Google’s artificial intelligence chips, lending a tailwind to Alphabet.

And the oil majors such as Chevron and Exxon Mobil followed Brent crude prices lower as investors see a growing chance of the Russia-Ukraine war coming to an end.

Local issues

New Zealand investors are gearing up for a busy day with the Reserve Bank’s final monetary policy statement of the year expected to deliver another 25 basis point cut to the official cash rate, taking it to 2.25%, and for the future track to remain open to further reductions once incoming governor Anna Breman takes over the reins of the central bank.

“A 25 basis point cut is a strong consensus view and is well-priced,” Bank of New Zeland senior markets strategist Jason Wong said in a note. “Focus will be on the policy outlook, where most expect the door to be left open to further possible easing but there is keen interest in the conviction of any tone here.”

The kiwi dollar rose to 56.24 US cents at 7am in Auckland from 56.03 cents yesterday with the latest glut of US economic data coming in weaker than expected and San Francisco Federal Reserve president Mary Daly throwing her support behind a rate cut next month.

The firming views for the Fed to cut rates supported gains on Wall Street, with retailers buoyed by the likes of Kohl’s and Best Buy raising their annual outlooks ahead of the key Black Friday trading period, despite the softer consumer spending data.

Home Depot and Walmart were among the larger retailers pacing gains for the Dow Jones Industrial Average, which was up 1.2% in late trading.

The Nasdaq gained a more modest 0.3% as Nvidia sank 4% after reports Meta Platforms is in talks to buy Google’s AI semiconductors, with the Alphabet unit seen as becoming a more aggressive rival to the dominant chipmaker.

Oil majors Chevron and Exxon Mobil were on the red side of the ledger as the US and Ukraine made progress in a plan to secure an end to the war with Russia. Brent crude futures were down 1.7% at US$61.63 a barrel.

No worries

Stock markets were broadly stronger across the Atlantic, shrugging off soft economic data in Germany and ahead of the UK government’s budget. The UK’s FTSE 100 up 0.8%, Germany’s DAX 30 gaining 1% and France’s CAC 40 advancing 0.8%.

The kiwi dollar traded at 48.55 euro cents from 48.65 cents yesterday, and was at 42.60 British pence from 42.77 pence.

Australian futures are pointing to a 0.8% gain for the S&P/ASX 200 index when trading opens across the Tasman, while New Zealand’s fortunes will be driven by heavyweight Fisher & Paykel Healthcare when the medical device maker reports its first-half result today.

Analysts predict exporter F&P Healthcare may beat guidance given the weakness in the kiwi dollar, which is down 6.4% on a trade-weighted basis since the end of June.

Auckland hospitality group Savor is also due to report its first-half result, providing the latest update on demand in the country’s biggest city.

There’s no major local data scheduled for today.

And across the Tasman, the Australian Financial Review’s Street Talk column is reporting Nasdaq-listed commodities broker Marex Group has participated in a US$17 million capital raising for local agritech firm Ruminant Biotech.

Reporting by Paul McBeth. Image from Curious News.