NZ returns from long weekend to slightly calmer markets

New Zealand’s trading desks are returning from the long Waitangi weekend to calmer global markets as Wall Street clawed back losses on Friday after Anthropic’s innocuous new tool for legal users dented software firms around the world, including NZX-listed Gentrack, Serko and Vista Group International.

Chipmaker Nvidia led the charge on Friday as it surged 7.9% to propel the Dow Jones Industrial Average above the 50,000 mark, although ecommerce giant Amazon’s doubling of its spending on artificial intelligence infrastructure failed to win much support on the day.

Australian futures are pointing to a stronger start to the week for the S&P/ASX 200 index after a sharp selloff on Friday – when New Zealand was closed for the Waitangi Day public holiday – as the local earnings season starts to pick up the pace, with Skellerup an early NZX reporter, while James Hardie and Commonwealth Bank of Australia are on the schedule across the Tasman.

Japan’s stock market is poised to extend its rally with prime minister Sanae Takaichi’s Liberal Democratic Party on track to secure a super-majority in the nation’s lower house, paving the way for a more expansive policy programme in the world’s fourth-largest economy.

What goes down

Stocks on Wall Street recovered from their three-day slide on Friday, with chipmaker Nvidia leading the Dow Jones Industrial Average’s 2.5% gain as the blue-chip index climbed above the 50,000 level for the first time.

The S&P 500 rose 2% on Friday and the Nasdaq Composite rose 2.2%, clawing back some of the losses felt most keenly by software-as-a-service firms after Anthropic’s Claude Cowork launched a new tool for legal users that prompted investors to rethink the eventual ripples of AI on data-rich firms.

European markets also rallied as investors recovered some of their fickle confidence, with the UK’s FTSE 100 up 0.6%, Germany’s DAX 30 gaining 0.9% and France’s CAC 40 advancing 0.4%, and the broader improvement in risk sentiment saw the kiwi dollar climb to 60.15 US cents at 7am in Auckland from 59.63 cents last week.

Ecommerce giant Amazon was a laggard on Friday, sliding 5.6% after investors cooled on its doubling of AI capital expenditure to US$200 billion this year.

The US corporate earnings season is past the halfway point, with 59% of S&P500 companies announcing their results. Of that, more than three-quarters have beaten analysts’ expectations, albeit a slightly smaller rate of positive surprises than the 78% average over the past five years.

Downunder earnings

New Zealand and Australia’s earnings season picks up in the coming weeks, with rubber goods maker Skellerup an early starter on the NZX when it reports on Thursday, which is expected to deliver a small increase in revenue and earnings, with a dividend hike on the cards. South Port New Zealand is due to report on Friday, before the pace accelerates next week.

Across the Tasman, biotech giant GSL, building materials firm James Hardie and ASB Bank-parent Commonwealth Bank of Australia are among the leading lights scheduled to update the market.

Australian futures are pointing to a 0.7% gain for the ASX200 when trading opens across the Tasman, clawing back some of the sharp selloff on Friday when softer prices for precious metals and the dour mood on software firms weighed on investors. Gold futures were up 0.2% at US$4,989 an ounce at 7am in Auckland.

Japan’s stock market is similarly poised for a rally with Nikkei projections pointing to prime minister Sanae Takaichi’s ruling LDP on track to win a super majority in the snap election she called to shore up support and drive a more expansive policy programme.

“Japanese equities are expected to gain support alongside higher Japanese government bond yields after a strong showing by prime minister Takaichi in the election providing clear support for the stimulus policies,” Bank of New Zealand senior interest rate strategist Stuart Ritson said in a note.

The kiwi dollar climbed to 94.56 yen at 7am in Auckland from 93.47 yen last week.

Reporting by Paul McBeth. Image from Ken Cheung on Unsplash.