Tech stocks pull back as Wall St snaps 3-day run; new RBNZ governor eyed

Stocks on Wall Street snapped a three-day gain as tech stocks pulled back from a rally on Nvidia’s investment in ChatGPT maker OpenAI, while Federal Reserve chair Jerome Powell left himself plenty of wiggle room in a speech pointing out there’s no risk-free path for the central bank.

US business activity continued to hold up in the latest surveys, while the OECD predicted a grim outlook for the world’s biggest economy later this year once the full impact of President Donald Trump’s tariff regime start to bite.

The kiwi dollar was largely in a holding pattern ahead of the naming of the Reserve Bank governor, while the New Zealand Herald’s annual Mood of the Boardroom survey showed cooling confidence in the economic outlook and delivered a stern message to the government as prime minister Christopher Luxon and finance minister Nicola Willis fell outside the top 10 Cabinet rankings among the captains of industry.

And KMD Brands is poised to report its annual earnings today, while reports across the Tasman say Australian billionaire Brett Blundy has been in the market looking for a meaningful stake of the ailing outdoor equipment chain.

Cool breeze

Stocks on Wall Street halted their record march, with the Nasdaq Composite falling 1% in late trading as tech companies pulled back from their latest bout of optimism over Nvidia’s plans to invest up to US$100 billion in artificial intelligence pioneer OpenAI. The S&P 500 slipped 0.6% while the Dow Jones Industrial Average was down a more muted 0.2%.

US stock markets have been buoyed by the Federal Reserve’s resumption of rate cuts, although chair Jerome Powell remains coy on how quickly the central bank will act, saying policymakers face a challenging situation in balancing the need to keep inflation tamed while protecting jobs. Powell said there’s no risk-free path, while noting the federal funds rate’s target range of 4%-to-4.25% remains modestly restrictive.

“Global asset markets were largely stable overnight with Federal Reserve chair Powell’s first speech since the FOMC last week providing few fresh clues on the outlook for monetary policy,” Bank of New Zealand senior interest rates strategist Stuart Ritson said in a note, referring to the federal open market committee. “Major US stock indices are lower and consolidating after the recent run up to record highs.”

The US economy continued to hold up with the latest advance PMI surveys showing business activity continues to expand. That comes as the Organisation for Economic Cooperation predicted the world’s biggest economy will feel the full brunt of the White House’s tariff regime later this year, while projecting a slower decline in the pace of growth than its previous forecast.

Meanwhile, US President Donald Trump lashed the United Nations in a speech to the body’s general assembly, saying climate change and migration policies threaten Western civilisation and that strong borders and traditional energy sources are needed.

Across the Atlantic, stock markets were more buoyant, with the UK’s FTSE 100 index marginally lower, while Germany’s DAX 30 gained 0.3% and France’s CAC 40 advanced 0.5%.

Luxury stocks such as LVMH and L’Oreal and Richemont were among the European leaders as data showed American spending on luxury goods was on the rise.

A new governor?

The softer tone on Wall Street is pointing to a slow start in the antipodes, with Australian futures pointing to a 0.3% decline for the S&P/ASX 200 index when trading opens across the Tasman.

Meanwhile, the kiwi dollar traded at 58.55 US cents at 7am in Auckland from 58.46 cents yesterday. The government is expected to announce the next governor for the Reserve Bank today, with Bloomberg yesterday reporting that the successful candidate will likely be a woman from overseas. Deputy governor Christian Hawkesby was appointed governor for a six-month period when Adrian Orr departed suddenly earlier this year.

The New Zealand Herald’s annual Mood of the Boardroom survey showed senior executives’ optimism about the economic outlook has cooled over the past 12 months, with prime minister Christopher Luxon and finance minister Nicola Willis failing to crack the top 10 ranked Cabinet ministers.

Immigration and education minister Erica Stanford topped the rankings, followed by foreign minister and NZ First leader Winston Peters, and infrastructure minister Chris Bishop.

There’s no local data scheduled for today, while retailer KMD Brands is poised to report its annual result, having signalled a 0.5% decline in sales and that margins remain under pressure.

Meanwhile, The Australian’s DataRoom column today reported Australian billionaire Brett Blundy has been seeking a meaningful stake of KMD, with the shares trading at a record low 23 cents, valuing the firm at $163.7 million.

Reporting by Paul McBeth. Image from the blowup on Unsplash.