Fonterra poised to deliver strong result; Wall St stalls
A rising greenback kept the kiwi down.
Fonterra Cooperative Group is poised to deliver a strong result, albeit one that follows a similarly strong 2024 year, as international demand for milk products remains robust, with the Shareholders’ Fund starting the day near a record high.
Meanwhile, exporters such as Fonterra and Fisher & Paykel Healthcare will be eyeing the weakness in the kiwi dollar, which is trading well below the July levels underpinning F&P’s guidance, with an ascendent greenback following US government bond yields higher.
Stocks on Wall Street were generally softer for another day, with Alibaba’s latest pledge to ramp up spending on artificial intelligence tempering optimism about America’s Magnificent 7.
And Freeport-McMoran tumbled 16% to lead the S&P 500 lower as the miner dials back the production outlook at Grasberg Block Cave mine in Indonesia, where a mud rush earlier this month killed two people and left another five still missing.
Caution in the wind
Wall Street continued its pullback with the tech sector broadly under pressure as the growing AI investment from the likes of Alibaba and Huawei Technologies tempered expectations for US semiconductor and chip firms.
Meanwhile, Tether is reportedly raising US$15 billion-to-US$20 billion valuing the world’s biggest stablecoin operator at US$500 billion. Crypto stocks were mixed as Circle Internet Group rallied in late trading, while Bullish and Gemini Space Station were on the red side of the ledger. Bitcoin was up 1.5% at US$113,677 at 7am in Auckland.
The major US indices were all down 0.3% in late trading, with the S&P 500 led lower by Freeport-McMoran as the miner digests the impact of a mud rush at a major site in Indonesia, with preliminary estimates indicating 2026 production could be as much as 35% lower than earlier forecasts.
Stock markets across the Atlantic were broadly upbeat as defence companies including Saab, Rheinmetall and Leonardo rallying as US President Donald Trump ratcheted up pressure on Russian President Vladimir Putin and committed to provide more weapons to NATO members.
The UK’s FTSE 100 index rose 0.3% and Germany’s DAX 30 gained 0.2%, while France’s CAC 40 slipped 0.6%.
The kiwi dollar dropped to 58.10 US cents at 7am in Auckland from 58.61 cents yesterday as the greenback followed US government bond yields higher in the nervous trading session.
Grounded kiwi
The New Zealand dollar’s weakness was widespread as it dropped on all its major cross-rates, touching new multi-year lows against the Aussie and the euro, boding well for exporters while increasing import prices.
“Markets have traded with a more cautious tone overnight without any obvious driver, seeing modest falls in US equities and modestly higher US Treasury yields,” Bank of New Zealand senior markets strategist Jason Wong said in a note. “US Treasury yields pushed higher from early in the European trading session, with levels sustained following unusually strong home sales data.”
The yield on 10-year US Treasuries rose 4 basis points to 4.15%, while New Zealand’s equivalent dipped 1 basis point to 4.2%.
The subdued tone on Wall Street is set to filter through to the antipodes, with Australian futures pointing to a 0.5% decline for the S&P/ASX 200 index when trading opens across the Tasman.
Fonterra’s annual result is the main event for New Zealand, with the dairy exporter expected to deliver earnings at the upper end of its 65-to-75 cents per share guidance, implying something closer to $1.21 billion.
The Fonterra Shareholders’ Fund surged yesterday, hitting a record high on an adjusted basis, and the dairy exporter is expected to provide more clarity on the $4.2 billion sale of its Mainland consumer business to France’s Lactalis, which will release capital to farmer-shareholders and unitholders.
NZ King Salmon Investments is also due to report its first-half result, while Air New Zealand is among firms holding annual meetings today in what will be chief executive Greg Foran’s swansong at the national carrier.
