RBNZ rate cut all but priced in; Wall St slides as tech stocks waver
The old firm of Spark and Fletcher are poised to report today.
New Zealand’s Reserve Bank is widely expected to deliver a quarter-point rate cut at today’s review, with investors eyeing whether the monetary policy committee is leaning towards an earlier follow-up reduction or will want to wait until next year before going again.
Meanwhile, a slide in the Magnificent 7 megastocks led by chipmaker Nvidia sapped Wall Street, with the Nasdaq Composite down 1.5% in late trading and capturing local favourite Rocket Lab as the space company sank 8.8%.
The local earnings season resumes its heavy lifting with telco Spark New Zealand and building company Fletcher Building both poised report their annual results, with the firms’ respective efforts to cast off recent speed wobbles in view.
And dairy prices dipped at the latest Global Dairy Trade event on softer cheese and butter prices, although the all-important whole milk powder prices nudged higher.
Soft kiwi
The New Zealand dollar fell to 58.95 US cents at 7am in Auckland from 59.26 cents yesterday ahead of the Reserve Bank’s monetary policy statement, which is widely expected to deliver a cut the official cash rate to 3% from 3.25%, with economists watching for any tweaks to the future track to bring forward another reduction.
“In the day ahead, the domestic focus will be on the RBNZ MPS, where a 25 basis point cut in the cash rate to 3% is universally expected and well-priced,” Bank of New Zealand senior markets strategist Jason Wong said in a note. “Focus will be on the projections and policy guidance, in particular clues for how much further, if at all, the easing cycle might be extended.”
Central bankers are descending on Jackson Hole in Wyoming for the US Federal Reserve’s annual symposium, where chair Jerome Powell’s keynote speech at the end of the week is high on the radar for signs of any changing view on the outlook for global rates.
Stocks on Wall Street declined with tech stocks such as Palantir Technologies and Advanced Micro Devices among those giving back recent gains as the Nasdaq dropped 1.5% in late trading. The Dow Jones Industrial Average was down a more sedate 0.1%, with Nvidia and Amazon leading declines among the Magnificent 7 megacap stocks.
Local favourite Rocket Lab was caught up in the tech sell-off, falling 8.8% in late trading. The space company is holding its next Electron rocket launch this weekend and will deploy five satellites for a commercial customer.
Not all companies
Intel was a standout, climbing 6.8% after Japan’s SoftBank agreed to invest US$2 billion in the chipmaker. US Treasury secretary Scott Bessent confirmed the federal government is considering an investment in the firm, converting grants promised to Intel under the Biden administration into non-voting shares.
Palo Alto Networks also rallied after beating earnings expectations and delivering stronger guidance than predicted.
Big-box US retailers are in view, with Home Depot up 3% after signalling modest price rises are likely after the chain reported a soft quarterly result while reaffirming annual guidance. Lowe’s, Target and Walmart are also due to report this week.
Stock markets were stronger across the Atlantic, with the UK’s FTSE 100 index up 0.3%, Germany’s DAX 30 climbing 0.5% and France’s CAC 40 advancing 1.2%, led by software firm Capgemini.
European defence stocks were broadly weaker after US President Donald Trump’s meeting with Ukraine’s Volodymyr Zelensky to discuss ending the war with Russia.
In the antipodes, Australian futures are pointing to a 0.2% gain for the S&P/ASX 200 index when trading opens across the Tasman. Australian shares were rocked yesterday as CSL slumped on news of a wide-ranging restructuring plan, including the spin-out of its vaccine division.
The local earnings season continues today with Spark and Fletcher both scheduled to report their annual results. The telco and building materials firm are both trying to regain investor confidence after their respective downturns.
Dairy prices were weaker at the latest Global Dairy Trade event, with the GDT price index slipping 0.3%, led by declines in butter and cheese prices, for an average selling price of US$4,291 a tonne. Whole milk powder prices, a key product Fonterra Cooperative Group, rose 0.3% to US$4,036 a tonne.
Reporting by Paul McBeth. Image from Curious News.
This story has been updated to correct a typo in the headline.
