NZX, ASX poised to gain amid softer oil prices; US tech knocked

The NZX and ASX are set for a positive start when trading opens in the antipodes after oil prices fell as the US and Iran made progress in their latest round of peace talks, spurring gains for US and European airlines, banks and manufacturers.

Stocks on Wall Street were mixed with the Dow Jones Industrial Average advancing on the cheaper energy prices, with Caterpillar leading the blue-chip index higher, while the tech-heavy Nasdaq Composite declined with Alphabet and Amazon among the bigger drags as fears over the massive spending on artificial intelligence again raised their head.

The UK’s FTSE 100 rallied and the British pound gained against most of its trading partners after prime minister Keir Starmer resigned to quell growing discontent among the ruling Labour party.

And former Federal Reserve chairman Alan Greenspan, who presided over the Fed for 18 years, has died aged 100.

Mixed session

Brent crude oil futures fell 2.6% to US$77.79 a barrel at 7am in Auckland as investors welcomed the progress in the latest round of US and Iran negotiations, with the Islamic Republic agreeing to invite International Atomic Energy Agency inspectors back into the country.

Australian futures are pointing to a 0.3% gain when trading opens across the Tasman, following a cue from European stock markets and Wall Street’s Dow, with Caterpillar, JP Morgan Chase and Amgen leading the blue-chip US index’s 0.1% increase.

“The NZX is expected to open modestly higher on Tuesday after progress in US-Iran negotiations improved investor sentiment and pushed oil prices to their lowest levels since March,” Moomoo market strategy consultant Greg Boland said in a note. “While Wall Street was mixed with less than an hour remaining before the closing bell, falling energy prices and signs of diplomatic progress in the Middle East should provide a supportive backdrop for local investors.”

The tech-heavy Nasdaq was down 1.3% in late trading with four of the Magnificent 7 megacap companies on the red side of the ledger amid renewed fears over AI capital spending, and SpaceX fell for a third session, down 13% at US$161.77, though still holding above its initial public offering price.

Local favourite Rocket Lab dropped 6.7% to US$100.10 in late trading.

Micron Technology climbed 5.2% in late trading after signing a supply deal with Claude-maker Anthropic, with the semiconductor firm’s earnings on Wednesday a key event for Wall Street this week.

Time to go

Across the Atlantic, stock markets were broadly stronger with British banking stocks among the gainers after UK prime minister Starmer resigned, paving the way for Andy Burnham to succeed him. The FTSE 100 rose 0.7% and Germany’s DAX advanced 0.6%, while France’s CAC 40 dipped 0.3%.

The British pound rallied after Starmer’s resignation announcement, with the kiwi falling to 43.13 pence at 7am from 43.36 pence yesterday.

The kiwi was broadly softer, trading at 57.11 US cents from 57.28 cents yesterday and declining to 81.59 Australian cents from 81.76 cents.

Locally, Kiwi Property Group and Argosy Property are holding annual meetings in Auckland today, while no major data are in the calendar.

And former Fed chair Alan Greenspan’s life and legacy have been marked after he died, aged 100. Greenspan oversaw the Fed from 1987 to 2006.

“The passing of former Federal Reserve chairman Alan Greenspan also prompted reflection on the legacy of the so-called ‘Greenspan Put’ – the long-held belief that the central bank would step in to support markets during periods of stress, a debate that continues under new Fed chair Kevin Warsh,” Moomoo’s Boland said.

Reporting by Paul McBeth. Image from Austin Distel on Unsplash.