Pending Middle East deal sets upbeat mood for antipodes
Central banks will have plenty to say this week.
New Zealand and Australian stock markets are poised to start the week on a stronger note as the US and Iran edge closer to reaching a ceasefire, with President Donald Trump telling Israel and Hezbollah to stand down as he pushes to close the deal.
Stocks in Europe and the US rallied on Friday amid the hubbub of the SpaceX initial public offering, which delivered a 19% stag on debut and reinforced demand for the dominant artificial intelligence theme which has fuelled local names such as Infratil.
Meanwhile, central banks are high on the agenda with the Reserve Bank of Australia the first of a clutch of monetary policymakers reviewing interest rates this week, including the Federal Reserve’s first meeting chaired by Kevin Warsh.
And local retailers such as Briscoe Group and Hallenstein Glasson Holdings will be in view today with Statistics New Zealand’s monthly credit and debit card spending data due, while the National Business Review’s annual Rich List marked its 40th birthday with a 26% lift in the elite group’s wealth from a year earlier.
Peace in our time
The local markets wake up to growing optimism that the US and Iran would reach a deal to end hostilities, with President Trump saying a ceasefire would be agreed in the coming hours. The Polymarket prediction market was pricing in a 43% chance of a deal by the end of June and a 56% chance by the end of July.
Still, an Israeli strike on Beirut prompted a rebuke from Trump, calling the retaliation to a Hezbollah drone attack ill-timed and urging restraint so as to not disrupt the deal.
Oil prices declined on Friday when Trump first flagged the agreement was near, providing a tailwind for the historic SpaceX initial public offering that delivered a 19% pop for the AI conglomerate. Brent crude oil futures fell 4.1% to US$86.71 a barrel.
“The listing instantly valued the company at more than US$2 trillion and reinforced investor enthusiasm for the AI, space and infrastructure themes that continue to dominate global markets,” Moomoo market strategy consultant Greg Boland said in a note. “The successful debut also fuelled expectations for future listings from OpenAI and Anthropic later this year.”
Stocks on both sides of the Atlantic rallied on Friday, with the Dow Jones Industrial Average up 0.7% and the S&P 500 gaining 0.5%, while the Nasdaq Composite increased 0.3%. The UK’s FTSE 100 climbed 1.6% and Germany’s DAX and France’s CAC 40 both gained 1.8%.
Space companies gave up some of their recent gains in the shadow of the SpaceX IPO, with AST SpaceMobile slumping 16% on Friday, while local favourite Rocket Lab declined 11% to US$102.39.
Interesting rates
Central banks in Australia, the US, Japan and the UK are due to review their respective monetary policies this week, with the RBA first out of the blocks on Tuesday and expected to keep its benchmark rate on hold after a series of hikes.
Meanwhile, the Fed’s meeting will be closely watched given it’s the first under the chairmanship of Kevin Warsh, although economists anticipate no change in the fed funds rate.
The kiwi dollar traded at 58.31 US cents at 7am in Auckland from 58.25 cents last week.
The strong trading session on Friday is poised to continue into the antipodes, with Australian futures pointing to a 0.4% gain for the S&P/ASX 200 index when the market opens across the Tasman.
Energy companies will be in view after Woodside Energy’s US depositary notes jumped 6.2% in New York after Bloomberg reported Exxon Mobil was eyeing up the Australian group as a potential acquisition target.
Locally, Stats NZ electronic card spending figures will put the focus on retailers, while the BNZ-BusinessNZ performance of services index and Real Estate Institute of New Zealand housing data are also scheduled.
And the NBR’s annual Rich List showed the collective wealth of the nation’s elite climbed 26% to $129 billion this year, with Rocket Lab founder Peter Beck one of the biggest movers as his net worth soared to about $11 billion from $650 million a year earlier.
Reporting by Paul McBeth. Image from Tabrez Syed on Unsplash.
