Renewed AI fears weigh on Wall St; oil rallies amid Venezuela blockade
New Zealand’s economy is expected to show some chunky growth.
Stocks on Wall Street sank as tech companies including Nvidia and Oracle were knocked with investors still uneasy about the heavy spending on artificial intelligence infrastructure, while the battle for Warner Bros Discovery heated up with the media group’s board continuing to throw its weight behind Netflix’s offer in dismissing Paramount Skydance’s hostile bid.
Energy majors including Chevron and Exxon Mobil recovered from yesterday’s slide as Brent crude oil prices rebounded after the White House ordered a blockade of all sanctioned tankers entering and exiting Venezuela, while miners such as Freeport McMoran were on the green side of the ledger with gold prices nudging higher.
Federal Reserve governor Christopher Waller – who’s on US President Donald Trump’s shortlist to replace Fed chair Jerome Powell next year – laid out the case for further rate cuts in the world’s biggest economy, while meetings from the Bank of England and European Central Bank are in view.
And Statistics New Zealand figures today are expected to show the domestic economy grew at twice the pace the Reserve Bank’s expecting when the September gross domestic product figures come out today.
Tech fears
Stocks on Wall Street were back on the red side of the ledger with the tech-heavy Nasdaq Composite down 1.1% in late trading as renewed fears about the pace of investment in AI infrastructure continued to keep investors on edge, with the volatility index up 5.9% at 17.45 at 7am in Auckland.
Nvidia was down 3.3%, while Oracle dropped 4.7% amid reports the software firm’s biggest data centre partner, Blue Owl Capital, won’t provide capital for a US$10 billion deal build its next facility. Oracle’s debt-fuelled investment has been a key focus as investors weigh up whether AI will deliver the returns needed to justify the leveraged investment.
“Jitters over tech and the AI sector continue to overhang the US equity market,” Bank of New Zealand senior markets strategist Jason Wong said in a note.
The S&P 500 fell 0.7% and the Dow Jones Industrial Average declined 0.2%.
Warner Bros Discovery declined after the board rebuffed the hostile takeover by Paramount Skydance, preferring the negotiated deal with Netflix. The streaming giant’s shares were up in late trading, while NZX-listed Sky Network Television will be back in view for local investors, given it sources its HBO entertainment content from Warner Bros Discovery.
The biggest blockade
Energy majors including Chevron, Exxon Mobil, Shell and BP following oil prices higher, with Brent crude futures up 1.5% at US$59.81 a barrel after US President Donald Trump ordered a blockade of sanctioned oil tankers entering and exiting Venezuela.
Commodity prices were stronger more generally, with gold futures up 0.9% at US$4,369 an ounce, buoying mining companies such as Freeport McMoran. Australian futures are pointing to a 0.4% gain for the resources-rich S&P/ASX 200 index when trading opens across the Tasman.
Meanwhile, Federal Reserve governor Christopher Waller said interest rates are still too high for the slowing US jobs market, and outlined a scenario where they’re 1 percentage point above neutral as central bank officials outline their thinking following last week’s policy review. Waller is in the running to replace Fed chair Jerome Powell next year.
The European Central Bank is expected to hold its key rates at its policy review on Thursday, while the Bank of England is expected top cut its benchmark by a quarter-point after inflation figures showed UK consumer prices fell more than expected in November.
The UK’s FTSE 100 rose 0.9% in a mixed day for European stock markets, with Germany’s DAX 30 down 0.5% and France’s CAC 40 falling 0.3%.
The kiwi dollar traded at 49.17 euro cents at 7am in Auckland from 49.29 cents yesterday and was almost unchanged at 43.16 British pence. It traded at 57.79 US cents from 57.85 cents yesterday.
Locally, Stats NZ will release the September quarter gross domestic product figures today, which are expected to show the economy grew 0.9% in the period, more than twice the forecast pace in the Reserve Bank’s latest forecast.
New Zealand’s central bank governor Anna Breman took to jawboning down wholesale interest rates after they started pricing in rate hikes next year, leading to some banks to raise longer-dated mortgage rates. ASB Bank was the latest lender to increase its longer mortgage rates today.
Across the Tasman, ANZ Group Holdings is holding its annual meeting today, and faces a second strike in the resolution to accept the bank’s remuneration report, with investors unhappy about the regulatory scrutiny the lender has attracted this year.
