Investors start new week with Nvidia earnings, US data in view

ASX futures are pointing to a soft start to the week in the antipodes after a mixed Friday on Wall Street as investors continue to pare back their expectations for the Federal Reserve to cut interest rates, with central bankers questioning whether rates need to go lower as they prepare for a glut of official economic data.

Nvidia nudged up on Friday in a mixed session for Wall Street as the tech-heavy Nasdaq Composite edged higher, with the chipmaker rounding out earnings for the Magnificent 7 as hedge funds start dialling back their exposure to the megacap stocks.

The domestic shoulder earnings season continues with Serko and Sanford reporting on Tuesday, while local data today include the Real Estate Institute of New Zealand’s monthly house sales figures, the BNZ-BusinessNZ services activity gauge and Statistics New Zealand’s latest partial inflation reading.

And trade minister Todd McClay welcomed the US removing reciprocal tariffs on a range of local agricultural exports such as beef and kiwifruit, covering about a quarter of New Zealand’s sales to American buyers.

Sleepy Monday

Australian futures are pointing to a 0.2% decline when the S&P/ASX 200 index opens, continuing Friday’s rout as investors pare back their expectations for lower interest rates. The kiwi dollar traded at 56.81 US cents at 7am in Auckland from 56.87 cents on Friday.

Wall Street was mixed on Friday with the Dow Jones Industrial Average falling 0.7% while the Nasdaq Composite edged up 0.1%, with Nvidia and Microsoft on the green side of the ledger, while other Magnificent 7 stocks declined.

Nvidia’s quarterly earnings on Wednesday after the bell will be keenly watched by investors as they continue to gauge the pace of growth in the artificial intelligence boom.

Regulatory filings showed some of Wall Street’s biggest hedge funds have been reducing their exposure to the Magnificent 7 megacap stocks, although Berkshire Hathaway bought more shares of Google-parent Alphabet in a quarter that it was a net seller of stocks.

Apple dipped on Friday after the Financial Times reported the iPhone maker is accelerating succession planning with chief executive Tim Cook preparing to step down as early as next year.

Meanwhile, investors are bracing for the return of official economic data with the reopening of the US federal government and are dialling back expectations for the Federal Reserve to cut interest rates, with bond traders pricing in 11 basis points of cuts at next month’s meeting.

That’s been underpinned by more hawkish Fed officials questioning the need for a cut at the December meeting of the federal open market committee, with Kansas City Fed president Jeffrey Schmid, Dallas Fed president Lorie Logan and Cleveland Fed president Beth Hammack reiterating their respective views in recent days.

“Investors have cited high valuations for technology firms and reduced expectations for easing by the Federal Reserve as headwinds for the equity market,” Bank of New Zealand senior interest rate strategist Stuart Ritson said in a note.

Bringing it all back home

New Zealand’s shoulder earnings season continues this week, with Serko and Sanford the early starters when they report on Tuesday. Others include Argosy Property, Goodman Property Trust, Turners Automotive Group and Oceania Healthcare.

There’s a slew of annual meetings this week including Precinct Properties NZ, KMD Brands, a2 Milk Co, and Sky Network Television.

Local data today including the Real Estate Institute of New Zealand’s monthly house sales figures, which ANZ economists predict will show a small increase in seasonally adjusted prices.

The BNZ-BusinessNZ performance of services index and Stats NZ’s selected prices are also due for release.

Meanwhile, US President Donald Trump excluded a range of food products from his reciprocal tariff regime over the weekend, covering about quarter of New Zealand’s exports to the world’s biggest economy, such as meat and kiwifruit.

Trade minister Todd McClay welcomed the move, saying it will save an estimated $330 million of extra tariffs.

“I have spoken directly with my US trade counterpart USTR Jamieson Greer a number of times over the last few months and will continue to make the case that New Zealand’s trading relationship with the US is balanced and that the additional reciprocal tariffs on other New Zealand exports should also be removed,” he said in a statement.

Reporting by Paul McBeth. Image from Patrick Tomasso on Unsplash.