NZ dollar falls as US-Iran clash saps investor sentiment; new tariffs weigh
Alphabet plans to raise even more money.
The New Zealand dollar fell half a US cent as investors’ appetite for riskier assets dried up in the latest flare-up military action between the US and Iran and as US President Donald Trump proposed a new wave of tariffs.
Stocks on Wall Street were broadly weaker as oil prices marched closer to US$100 a barrel, with International Business Machines, Salesforce and Honeywell International leading the Dow Jones Industrial Average lower, while most of the Magnificent 7 companies were on the red side of the ledger.
Google parent Alphabet declined after upsizing its planned equity raising to US$84.75 billion in what was already going to be the biggest ever share sale, while Elon Musk’s SpaceX is due to finalise pricing for its historic initial public offering.
And that downbeat mood is set to continue into the antipodes with Australian futures pointing to a soft start to the ASX and Reserve Bank of Australia governor Michele Bullock due to speak to policymakers today, while Statistics New Zealand will release the building activity figures for the first three months of the year and ANZ’s monthly commodity price index is due.
A global chill
The kiwi dollar fell to 58.63 US cents at 7am in Auckland from 59.13 cents yesterday as the US and Iran exchanged fire in the Middle East, sapping hopes for a lasting ceasefire. Brent crude oil futures rose 2.2% to US$98.14 a barrel and the CBOE volatility index, known as Wall Street’s fear gauge, rose 1.7% to 16.05.
The Polymarket prediction market was pricing in a 23% chance of a peace agreement by the end of the month and a 37% chance by the end of July.
“Overnight, there were no fresh developments, but it is fair to say conditions remain tense, the so-called ceasefire is on shaky ground, and there is still no sign of the imminent peace deal that Trump has repeatedly claimed is forthcoming,” Bank of New Zealand senior markets strategist Jason Wong said in a note.
Separately, New Zealand was among dozens of countries facing new US tariffs after the Trump administration proposed new import levies, saying the nations weren’t doing enough to block imports of goods made from forced labour. The White House was forced to change tack over its tariff policy after the Supreme Court ruled the president exceeded his authority with the Liberation Day levies.
Stocks on Wall Street were broadly weaker, with the Dow falling 0.6% in late trading, while the S&P 500 dropped 0.9% and the Nasdaq Composite declined 0.8%. European markets were also softer as the UK’s FTSE 100 slipped 0.4%, Germany’s DAX dropped 1.3% and France’s CAC 40 decreased 0.7%.
Mega money
Most of the Magnificent 7 megacap stocks eased, including Alphabet after it upsized its capital raising, with chipmaker Broadcom in view when it reports after the close of trading.
The Alphabet capital raising, followed by IPOs from SpaceX and Anthropic will prompt investors to rejig their portfolios to participate, with the new listings getting fast-tracked to join the major indices.
Meme stock GameStop rose 6.3% after the videogame retailer reported increased quarterly profit, and announced plans for a US$2 billion share buyback.
Financial companies including banks and private equity managers were weaker after Swiss firm Partners Group limited withdrawals on its US$8.6 billion Global Value Sicav fund after redemption requests rose to 10% of the fund’s value.
Greg Boland, market strategy consultant at Moomoo, said the soft lead from the US and Europe would probably carry through into the New Zealand and Australia trading days, with investors nervous about rising oil prices, the heightened geopolitical uncertainty and rising bond yields.
“However, ongoing strength in the AI and semiconductor sectors, along with a still relatively low VIX, suggests investors remain willing to buy growth opportunities despite the increasingly challenging macro backdrop,” Boland said in a note. “Broadcom earnings after the US close will be the key market event to watch.”
Australian futures are pointing to a 0.6% decline for the S&P/ASX 200 index when trading opens across the Tasman.
Local data today include Stats NZ’s March quarter building work and ANZ’s monthly commodity price index. The Treasury’s Debt Management unit will hold its weekly bond auction, selling $225 million each of 2031 and 2037 notes.
Reporting by Paul McBeth. Image from Curious News.
