Renewed ceasefire hopes buoy Wall St as NZ braces for cyclone

Stocks on Wall Street rose as reports that Israel and Lebanon would start negotiating a ceasefire helped quell fears over the fragile peace in the Middle East, despite Israeli prime minister Benjamin Netanyahu pressing on with attacks on Hezbollah targets.

Amazon led gains on the Dow Jones Industrial Average, with Caterpillar and biotech firm Amgen leading the blue-chip index higher in late trading, while software-as-a-service firms remained on the back foot on both sides of the Atlantic, with declines for Salesforce, Atlassian, SAP and Capgemini.

Australian futures are pointing to a positive start to the day for the resources-heavy ASX, with gold futures edging higher and Brent crude oil holding below US$100 a barrel.

Meanwhile, New Zealand is bracing for Cyclone Vaianu, which is expected to trigger severe weather warnings across the North Island in the coming days, with general insurer Tower getting knocked in trading on Thursday in its steepest one-day decline in three months.

Calming noises

Stocks on Wall Street gained as investors recovered confidence that tensions in the Middle East will subside amid reports that Israel and Lebanon will hold direct talks to negotiate a ceasefire, with the volatility index, known as Wall Street’s fear gauge, falling 4.9% to 20.04. The Dow was up 0.6% in late trading, while the S&P 500 gained 0.5% and the tech-heavy Nasdaq Composite advanced 0.6%.

Still, nervousness about the fragile truce in the Middle East weighed on European markets, with the UK’s FTSE down 0.1%, Germany’s DAX falling 1.1% and France’s CAC 40 slipping 0.2%.

And Israeli prime minister Netanyahu’s comments that he won’t stop attacks on Hezbollah tempered any optimism. Brent crude oil futures rose 0.5% to US$96.44 a barrel at 7am in Auckland.

“Risk sentiment has improved further, with Israel scaling back its bombing of Lebanon, improving the chance of a peace deal and an eventual reopening of the Strait of Hormuz,” Bank of New Zealand senior markets strategist Jason Wong said in a note. “The combination of hope that the Strait of Hormuz will eventually reopen, however long that takes, minimal reports of strikes on Arab gulf nations since Wednesday, and scheduled US-Iran peace talks in Pakistan this weekend is enough to encourage investors to adopt a more positive attitude toward developments.”

New offers

Amazon led the Dow higher, climbing 4.8% in late trading after saying its pharmacy arm would offer Eli Lilly’s new weight-loss drug.

Brown-Forman surged 11% after the Wall Street Journal reported the Jack Daniel’s maker was approached by Sazerac about a potential deal, providing some competition to suitor Pernod-Ricard.

Energy companies were weaker as Chevron echoed Exxon Mobil’s warning earlier this week that the Iran conflict trimmed production by about 6% in the March quarter.

SaaS companies were again in the spotlight, with Germany’s SAP leading the DAX lower and France’s Capgemini weighing on the CAC, while Salesforce was at the bottom of the Dow and Atlassian tumbled 8%.

The kiwi dollar rose to 58.55 US cents at 7am from 58.34 cents yesterday after US data showed muted consumer spending in February. Local data today include the BNZ-BusinessNZ performance of manufacturing index, which is expected to show a dip in industrial activity.

The gains on Wall Street are set to flow through to Australia, with futures pointing to a 0.2% gain for the S&P/ASX 200 index when trading opens across the Tasman.

The S&P/NZX 50 index is poised to snap a run of five weekly declines, up 2.9% so far this week.

New Zealand is bracing for Cyclone Vaianu to hit the North Island this weekend. Insurer Tower fell 3.3% on Thursday in its steepest one-day decline since mid-January, while apple exporter Scales Corp, which has operations in Hawke’s Bay, sank 3.1%.

Reporting by Paul McBeth. Image from Atilla Bingöl on Unsplash.