PAUL MCBETH: The oily pole of stock markets

Paul McBeth is the editor of The Bottom Line and Curious News, and previously worked at BusinessDesk for 15 years. He’s owned units of the Smart S&P/NZX 50 exchange traded fund since January 2024 and shares of Mainfreight since July 2025.

New Zealand just can’t quite seem to catch a break at the moment.

Fresh from one of the best earnings seasons we’ve seen on the NZX in years, the world was turned on its head by Trump 2.0 embarking on another weekend incursion, this time the assassination of Iran’s supreme leader Ayatollah Ali Khamenei and the upending of oil markets as the Middle East descended into chaos.

To be fair, the strikes were fairly well signalled with the expanding US military presence in the Gulf over recent weeks and the incessant sabre-rattling from President Donald Trump over the Islamic Republic’s nuclear ambitions.

But there’s still something quite shocking when the bombs start raining down and a region becomes embroiled in a real-world game of Risk.

From New Zealand, the Middle East seems so far away. Which is fair enough given the 15,000 kilometres or so separating us from Iran.

A plague I call a heartbeat

But the beating heart of the world’s energy production – roughly a third of the oil that still underpins modern society – comes from that part of the world. To put it in cow terms, New Zealand produces 3% of the world’s total raw milk, albeit we account for more than a third of global exports given most nations consume their own white stuff.

Going back to the Middle East conflict, the ripples came quickly with stock markets struggling to find solid ground, whipping around all week on the latest headlines, while bond markets started to groan as surging oil prices raised the prospect of the inflation dragon waking up.

Things aren’t so bad quite yet, even though we’ve seen Brent crude oil prices jump above US$90 a barrel for the first time since Russia invaded Ukraine and local headlines focusing on high-octane 95 crossing the $3 a litre mark – those Ford Rangers are hungry beasts.

The timing for the national carrier wasn’t great.

Air New Zealand was already something of a pariah during the earnings season as it signalled all options were on the table in a wide-ranging strategic review of the business. And, as Forsyth Barr unearthed on Friday, its hedging programme might be a little more porous than they hoped as the widening crack spread between jet fuel and Brent crude prices threatens to add an extra $4 million-to-$5 million in daily fuel costs for an already unprofitable airline.

You’ve been so long

Unsurprisingly, the national carrier – which is widely held by the Sharesies brigade after they piled into the airline’s vastly dilutive capital raising a few years back – watched its share price sink to covid lockdown levels on Friday.

Travel, tourism and logistics firms also felt the pain of rising oil prices, with the likes of Tourism Holdings, Move Logistics, Freightways, Mainfreight, Auckland International Airport and SkyCity Entertainment Group all under the pump in a soft week for the NZX’s benchmark indices.

And while everyone seems to detest the unpredictability of life, these types of shocks are more things to navigate than great existential questions.

Yes, rising Brent crude will push up the price of petrol for everyday households, but that will probably pass in due course.

Which probably makes it a good time to check whether you’re still comfortable with your own investment decisions – preferably with someone qualified to help you weigh up whether everything’s fit for the purposes you’re pursuing.

A judgement made can never bend

As the Reserve Bank tries to navigate those pesky inflationary impulses, compounded by a sinking kiwi dollar as traders flock to the warm bosom of the greenback, it also has to balance throttling those price rises with keeping alive the fledgling recovery, as Westpac New Zealand’s economics team so eloquently put it.

Because behind the fog of war, New Zealand’s earnings season provided a hallelujah moment for investors – literally in the case of Forsyth Barr’s research team, who noted it was the best reporting period since August 2022 in providing more pleasant surprises than uncomfortable misses.

Even those disappointments such as Spark New Zealand and Ebos Group weren’t as bad as previous outings.

See these eyes, so green

And while exporters such as a2 Milk Co, Skellerup Holdings and Scales Corp were among the leading lights of the season, there was plenty of healthy results from the more domestically focused firms such as Heartland Group Holdings, Freightways and Sky Network Television.

One of the more heartening elements of the season was the growth in top-line revenue among firms.

It might not have hit some of the loftier expectations that analysts had pencilled in, but was a sign that earnings growth wasn’t simply coming from firms chipping away at bloated operations or buying into the prevailing mindset that human workforces can be sidelined by artificial intelligence agents.

Because if the world’s going to jump from one crisis to the next, it’s far better for our shaky isles to be operating on a more solid foundation.

 Image from Zbynek Burival on Unsplash.