Bond market groans weigh on Wall St as Nvidia, SpaceX IPO docs loom
Serko, Argosy Property and Napier Port are reporting today.
Stocks on Wall Street declined as government bond yields renewed their advance as the protracted Middle East conflict threatens to drive up consumer prices and raising the chance of an interest rate hike by the Federal Reserve.
Investors are anticipating the upcoming result from chipmaker Nvidia, with semiconductor firms in vogue among fund managers who’ve increased their stock allocations in the latest Bank of America survey, while an initial public offering filing by Elon Musk’s SpaceX is expected to land in the coming days.
The subdued sentiment is set to weigh on the antipodes, with futures pointing to a soft start to the day for the ASX, while domestically, travel software firm Serko, landlord Argosy Property and Napier Port and scheduled to report earnings and New Zealand Rural Land Co and T&G Global are holding their annual meetings.
Meanwhile, retirement villages will be in view after the latest ASB housing confidence survey showed respondents expect prices to remain flat, while a small increase in milk product prices at the latest Global Dairy Trade event will keep dairy stocks such as the Fonterra Shareholders’ Fund in focus.
Growing interest
The yield on US 10-year Treasuries rose 6 basis points to 4.67% at 7am in Auckland, while the 30-year note’s yield hit a 19-year high as bond traders remain uneasy about the inflation outlook as the Middle East conflict drags on.
The White House held off from an imminent strike on Iran to consider the Islamic Republic’s latest response to US proposals, with Brent crude oil futures down 0.6% at US$111.48 a barrel. The Polymarket prediction market was pricing in an 11% chance of a permanent deal by the end of the month and a 28% chance by the end of June.
“It seems the market’s patience with the Fed ignoring its inflation target, and with the government making no attempt to address an unsustainable fiscal position, is wearing thin,” Bank of New Zealand senior market strategist Jason Wong said in a note. “Other countries face similar issues, with long-term rates for Germany, the UK and Japan also trading at multi-decade highs.”
Stocks on Wall Street declined, with the S&P 500 down 0.5% in late trading and the tech-heavy Nasdaq Composite falling 0.7% ahead of Nvidia’s quarterly result on Wednesday in the US. The Dow Jones Industrial Average fell 0.5%, with Amazon, 3M and Boeing leading the blue-chip index lower.
Still, fund managers boosted their stock exposure to a net 50% overweight in May from 13% last month, with almost three quarters of respondents long on semiconductor stocks.
Ready for lift off
The space sector is also in focus ahead of the anticipated IPO filing by SpaceX to meet the rumoured June 12 debut. Local favourite Rocket Lab fell 3.3% to US$126.90 in late trading, having surged 54% so far this month after its strong quarterly result.
Greg Boland, market strategy consultant at Moomoo, said the options market is pricing in a potential gain or decline of 6% after the Nvidia result – due on Thursday morning NZ time – underlining the importance for the broader artificial intelligence and tech sectors.
“The New Zealand market is expected to open cautiously today as investors continue to balance easing Middle East tensions against rising global bond yields and tonight’s key earnings report from Nvidia,” Boland said in a note.
Australian futures are pointing to a 0.2% decline for the S&P/ASX 200 index when trading opens today, while the kiwi dollar traded at 58.36 US cents at 7am from 58.51 cents yesterday.
The shoulder earnings season picks up pace today, with Serko, Argosy and Napier Port among those reporting. Serko and Napier Port are expected to meet expectations, while Forsyth Barr analysts said Argosy might forecast flat dividends for the 2027 year as asset sales and finding tenants for a building take longer than anticipated.
Meanwhile, retirement village operators Ryman Healthcare and Summerset Group Holdings will be in focus after the ASB housing confidence survey showed price expectations remain muted, with buying sentiment still robust due to the plentiful supply.
The GDT price index rose 0.6% at the latest GDT auction, with the average winning price of US$4,198 a tonne. Whole milk powder prices increased 1.2% to US$3,772/tonne.
NZ Rural Land Co will hold a virtual annual meeting today and T&G Global’s shareholders will meet in Auckland for their annual meeting.
Reporting by Paul McBeth. Image from Luca Bravo on Unsplash.
