Kiwi investor confidence cools; Fonterra earnings loom

New Zealand investor confidence took a knock in ASB Bank’s June quarter survey, particularly among older people, with the state of global affairs weighing heavily on people’s minds.

The latest results come as stocks on Wall Street climb to new heights after the Federal Reserve’s delivery of lower interest rates stokes demand for riskier assets.

Friday’s rally on Wall Street is poised to spill over to the antipodes, with Australian futures pointing to a gain for the ASX when trading opens today, while the local market’s attention is turning to Fonterra’s annual result in what’s been a good year for New Zealand’s primary sector.

And US President Donald Trump made it tougher for firms to tap foreign talent for specialty jobs in slapping on a US$100,000 fee to the H-1B visas, triggering a flurry of confusion over the weekend as holders were initially left wondering where that left them.

Falling records

Stocks on Wall Street continued their march higher on Friday as investors remained buoyed by the Federal Reserve’s rate cut and pathway to even lower interest rates.

The tech-heavy Nasdaq Composite was up 0.7% on Friday, while the S&P 500 rose 0.5% and the Dow Jones Industrial Average advanced 0.4%. Things were more muted across the Atlantic, with the UK’s FTSE 100 index slipping 0.1% and Germany’s DAX 30 down 0.2%.

“US equities closed last week near record highs with sentiment aided by the prospect of further easing by the US Federal Reserve,” Bank of New Zealand senior interest rate strategist Stuart Ritson said in a note. “The positive sentiment towards risk sensitive assets extended to credit markets where US high-grade spreads over treasuries reached 72 basis points, a fresh 27-year low.”

Meanwhile, US President Donald Trump created a flurry of activity when his administration announced a US$100,000 fee for the specialty worker visa favoured by tech firms and banks, with firms initially calling on those visa holders to make sure they were on American soil before the new rules came into effect.

The White House later clarified the order only applies to new applicants, not existing holders or those seeking renewals.

Trump also gave a few details about the deal he’s negotiating with Chinese President Xi Jinping to keep social media platform TikTok operating in the US, saying Oracle founder Larry Ellison, media mogul Lachlan Murdoch and Dell Technologies founder Michael Dell are involved.

Rippling gains

The upbeat tone on Wall Street is poised to continue in the antipodes, with Australian futures pointing to a 0.3% increase for the S&P/ASX 200 index when trading opens across the Tasman, while the kiwi dollar traded at 58.57 US cents at 7am in Auckland from 58.71 cents last week.

The bulk of companies with upcoming dividends have shed the rights to those returns, with Genesis Energy, Colonial Motor Co and Delegat Group going ex-dividend this week.

Fonterra Cooperative Group’s annual result on Thursday is the main local event, with the dairy exporter poised to deliver earnings of 65 cents-to-75 cents per share in a year when rising milk prices have buoyed farmgate returns.

KMD Brands and NZ King Salmon Investments are also due to report, while Air New Zealand is among firms holding annual meetings this week.

And as Wall Street notched up new records, ASB Bank’s latest investor confidence survey showed New Zealanders cooled on the outlook for their portfolios in the June quarter, with a net 1% of the 780 respondents expecting their returns will improve compared to a net 9% response in the March period.

That downbeat sentiment was felt most keenly among older people, with a net 15% of the 60-plus cohort predicting worse returns, their third quarter of holding a glum view.

Of those surveyed, 51% said they were very concerned about the impact of global political instability on their investments, with 47% wary of geopolitical tension and 41% worrying about trade policies.

In saying that, the New Zealand Shareholders’ Association’s weekly retail investor sentiment index had net sentiment at a net 37% of respondents bullish on the outlook for stock prices in the coming six months, up from 24% a week earlier.

Reporting by Paul McBeth. Image from Leonie Clough on Unsplash.