NZ signs India FTA as big US earnings week looms
Oil prices remain elevated as Iran pitches new idea.
New Zealand returns from its long weekend to trade minister Todd McClay signing a free trade agreement with India to support the coalition government’s goal of accelerating export growth as the economy continues to get buffeted by global uncertainty.
Brent crude prices pushed higher as the deadlock between US and Iran persisted after President Donald Trump pulled a planned envoy of negotiators on Friday, with the Islamic Republic putting forward a new offer to end the conflict on Monday.
Stocks on Wall Street were mixed on Monday ahead of a heavy earnings week, with Alphabet, Microsoft, Amazon and Meta Platforms due to report on Wednesday, with Apple due the following day, while the Federal Reserve and European Central Bank are among monetary authorities reviewing policy this week.
And New Zealand’s S&P/NZX 50 index will resume trading today with a soft lead coming from across the Tasman, with futures weaker and the S&P/ASX 200 index dipping on Monday as Origin Energy led declines among energy companies.
A busy weekend
New Zealand trade minister McClay signed a free trade deal with Indian commerce minister Piyush Goyal on Monday in a bid to grow the $3.95 billion two-way trade between the nations. The agreement will be tabled in New Zealand’s parliament today before being sent to the foreign affairs, defence and trade select committee for inspection.
The kiwi dollar rose to 59.09 US cents at 7am in Auckland from 58.53 cents on Friday, and traded at 82.23 Australian cents from 82.15 cents.
Tensions remain high in the Middle East, with the Polymarket prediction market pricing in 27% chance of a lasting peace between the US and Iran by the end of May and a 43% chance by the end of June.
Planned talks over the weekend were cancelled and Brent crude oil futures were up 2.7% at US$108.19 at 7am. Iran has since put forward a new proposal to reopen the Strait of Hormuz.
Meanwhile, the US has been preoccupied with a thwarted assassination attempt on President Trump. The suspect was arrested and has been charged with attempting to assassinate the president and two firearms offences.
Wall Street started the week in a subdued manner, with the Dow Jones Industrial Average dipping 0.1%, while the S&P 500 and Nasdaq Composite were both up 0.1%.
Magnificent earnings
McDonald’s Corp, International Business Machines and Walmart Inc were the laggards on the Dow, while Nvidia posted the biggest gain on the blue-chip index as investors turned their attention to artificial intelligence ahead of earnings from five of the Magnificent 7 megacap stocks this week.
“US equities have consolidated at record highs following Friday’s strong rally, with investors increasingly focused on the impact of the AI industry,” Bank of New Zealand senior market strategist Jason Wong said in a note.
Telecommunications carrier Verizon Communications rallied after reporting customer growth in the March quarter, while Domino’s Pizza tumbled 9.6% after cutting its sales expectations for the year.
Across the Atlantic, the UK’s FTSE 100 fell 0.6%, while Germany’s DAX and France’s CAC 40 both slipped 0.2%.
Meanwhile, the Fed is expected to keep the federal funds rate unchanged at its meeting this week, while central banks in Canada, Europe, and the UK are also due to review their policies. The Bank of Japan is expected to keep its benchmark rate at 0.75% at today’s meeting. The kiwi rose to 94.22 yen from 93.51 yen last week.
Bond traders are pricing in New Zealand’s Reserve Bank to hike the official cash rate at its July meeting.
Australia’s ASX200 dipped 0.2% on Monday, with energy companies weighing on the index.
Among dual-listed New Zealand firms, Meridian Energy dropped 2.5% on the ASX on Monday and Contact Energy dipped 0.5%, while Mercury NZ gained 0.4% and Genesis Energy advanced 2.4%. Fisher & Paykel Healthcare slipped 0.7%, Infratil declined 0.4% and Auckland International Airport decreased 0.5%.
New Zealand’s NZX50 returns from the long weekend, having dipped 0.2% last week. Australian futures are pointing to a 0.6% decline for the ASX200 when trading opens across the Tasman.
Local data today include March filled jobs from Statistics New Zealand, while the Reserve Bank’s latest foreign currency holdings are also due.
And the Australian Financial Review’s Street Talk reported BlackBull Markets is going ahead with a non-deal roadshow for a potential dual listing before the end of June.
Reporting by Paul McBeth. Image from Juan Carlos Ramirez on Unsplash.
