NZX50 on track for monthly gain as rumoured US, Iran ceasefire buoys Wall St
The kiwi dollar rose near a three-week high against the greenback.
New Zealand’s S&P/NZX 50 index is heading for a 2.4% gain this month, with index reweightings by the MSCI expected to fuel heavy trading as institutional investors tweak their portfolios.
That’s in a broadly upbeat environment as the US and Iran have agreed to extend their ceasefire subject to President Donald Trump signing off on the agreement, keeping oil prices in check and buoying stocks on Wall Street.
Exporters such as Fisher & Paykel Healthcare and Skellerup Holdings may get a tailwind from the prospect of a ceasefire, although a rally in the kiwi dollar may temper any gains.
And the domestic earnings season has largely wrapped up, with Third Age Health Services, ikeGPS and Trade Window Holdings among those bringing up the rear, while ANZ’s consumer and business confidence surveys are due today.
Fine fettle
The mood on Wall Street improved amid reports that Iran and the US reached a framework to extend their ceasefire for another 60 days, with unrestricted shipping through the Strait of Hormuz to resume and the Islamic Republic committing to not pursue a nuclear weapon.
The deal still needs to be approved by President Trump, but US stocks rallied, with the S&P 500 up 0.5% in late trading and the Nasdaq Composite advancing 0.8%. The Dow Jones Industrial Average was marginally higher.
Bonds also advanced with the yield on 10-year US Treasuries falling 7 basis points to 4.46%, while the volatility index, known as Wall Street’s fear gauge, fell 3.7% to 15.69. Brent crude oil futures slipped 0.2% to US$93.15 a barrel.
“There is no deal until there is a deal, but the market has taken the news positively,” Bank of New Zealand senior markets strategist Jason Wong said in a note.
The kiwi dollar climbed to 59.29 US cents at 7am in Auckland from 58.68 cents yesterday, with New Zealand’s currency gaining against most of its trading partners, nudging up to 82.78 Australian cents from 82.61 cents.
End of the month
Australian futures are pointing to a 0.6% gain for the S&P/ASX 200 index when trading opens across the Tasman, and New Zealand’s S&P/NZX 50 index has gained 2.4% so far this month, its biggest monthly gain since September last year.
The quarterly reweighting of the MSCI indices is expected to drive increased volumes late in the local trading session as institutional investors rejig their portfolios.
Greg Boland, market strategy consultant at Moomoo, said New Zealand’s stock market was expected to open modestly firmer, taking the strong leads from Wall Street’s Nasdaq and S&P and the easing in oil prices.
Logistics company Mainfreight rallied yesterday after its earnings met analysts’ expectations, helping quell fears the Middle East conflict and energy shock would shake it even harder.
“Gains may be led by growth-oriented and tech-adjacent names, while exporters and industrials could also benefit from improving confidence around global growth and easing Middle East tensions,” Boland said. “However, investors are likely to remain cautious around interest-rate sensitive sectors following the RBNZ’s hawkish hold earlier this week and ongoing debate around how long inflation pressures may persist.”
The local earnings season has largely wrapped up, with small-caps Third Age Health, ikeGPS and TradeWindow among those still due to report.
Meanwhile, ANZ’s business outlook and consumer confidence surveys are due to be released today, coming after the government yesterday projected a swifter return to surplus with the Treasury adopting what’s been described as optimistic economic forecasts to underpin a swelling tax take.
Reporting by Paul McBeth. Image from Curious News.
