Fading hopes of Middle East peace knock markets
Local retailers’ first-half results are in view today.
Stocks on Wall Street and in Europe tumbled and the kiwi dollar declined as hopes of a speedy end to the Middle East conflict faded as US President Donald Trump’s deadline for a deal draws near with Iran pushing back on backchannel offers to negotiate a ceasefire.
Brent crude oil futures climbed back above US$100 a barrel amid the heightened uncertainty, buoying energy majors including Chevron, Exxon Mobil, BP and Shell, ahead of New Zealand’s government outlining the framework and triggers that would prompt it to ration domestic fuel supplies.
Local logistics group Mainfreight and the listed ports will come into view today after German shipping liner Hapag-Lloyd said it expects a major knock to earnings this year from the rising costs and disruptions to trade flows.
And it’s a day of retail results today, with Hallenstein Glasson Holdings and Warehouse Group scheduled to report their first-half earnings, while KMD Brands is also expected to lift the veil on its plans to raise a reported $100 million to shore up its balance sheet after pushing out its earnings release from Wednesday.
The tide goes out
Volatility remains high in global markets, with the volatility index – known as Wall Street’s fear gauge – jumping 10% to 27.94 as stock markets on both sides of the Atlantic tumbled amid fears that US President Trump’s deadline to cut a deal with Iran won’t be met.
Odds of a deal got longer, with the Polymarket prediction market pricing in a 42% chance of a ceasefire being reached before the end of April, and Brent crude oil futures climbed 3.4% to US$102.32 a barrel at 7am in Auckland as Iran remains defiant in the face of US overtures to calm the conflict in the Middle East.
“Risk sentiment is weaker, as investors lose hope of any speedy resolution to the Iran conflict,” Bank of New Zealand senior markets strategist Jason Wong said in a note. “The chance of a deal ahead is remote, ahead of Trump’s deadline for the end of this week before he ‘obliterates’ Iran’s energy infrastructure.”
The risk-sensitive kiwi dollar was softer against most trading partners, falling to 57.58 US cents at 7am from 58.06 cents yesterday, and dropped to 91.99 yen from 92.58 yen.
Stock markets on both sides of the Atlantic were weaker, with the UK’s FTSE 100 down 1.3%, Germany’s DAX falling 1.5% and France’s CAC 40 declining 1%, while Wall Street’s S&P 500 slipped 1.5%.
The tech-heavy Nasdaq Composite dropped 2% in late trading, with semiconductor firms, software developers and internet content companies the biggest drags on Wall Street.
Among those Nvidia was down 3.7% in late trading and Micron Technology sank 7.5%, while Meta Platforms dropped 8.5% after two juries found its products harmed young people. Alphabet was down 3.5%.
The Dow Jones Industrial Average slipped 1% in late trading, led by Nvidia, Goldman Sachs and Boeing.
Getting the good oil
Meanwhile, oil majors rallied on the rising Brent crude price, with Chevron up 1.8% at the top of the Dow’s leaderboard.
The Organisation for Economic Cooperation and Development lifted its inflation forecasts due to the energy shock, and warned it threatened derailing global growth.
Meanwhile, German shipping liner Hapag-Lloyd dropped 4.7% after saying it expected earnings to be hit this year by the Middle East conflict as the energy shock pushes up costs and disrupts trade flows.
Local logistics group Mainfreight yesterday posted its biggest one-day gain since November and Freightways rallied after finance minister Nicola Willis said New Zealand’s government won’t lift its fuel alert level when outlining the framework and triggers for rationing on Friday.
Australian and New Zealand markets face a soft start to the day, with futures pointing to a 0.8% decline for the S&P/ASX 200 index when trading opens across the Tasman.
ASX-listed Xero announced a deal with Anthropic to embed the Claude artificial intelligence model into the accounting firm’s software.
And local retailers are in view today, with results from Hallenstein Glasson, Warehouse and KMD expected to land, the last of which has been in a trading halt for the past two days after delaying its Wednesday report as it seeks to raise capital to shore up its balance sheet.
Local data today include the ANZ-Roy Morgan consumer confidence index.
Reporting by Paul McBeth. Image from Vadim Fomenok on Unsplash.
