The Reserve Bank’s meeting on Wednesday is the key event this week with analysts expecting another cut to the official cash rate at this meeting before the crystal ball gets murkier.
Meanwhile, the shoulder earnings season hits a crescendo this week with Kiwi Property Group, Eroad and Turners Automotive Group kicking off things today ahead of the big blue-chip results from Infratil, Mainfreight, Fisher & Paykel Healthcare and Ryman Healthcare which land on Wednesday and Thursday.
And on Wall Street, Nvidia’s quarterly result on Wednesday in the US will take centre-stage with semiconductor giant a key driver for the major indices.
US President Donald Trump set the scene for a soft start to the week when he ratcheted up the tariff pressure on Europe last week and name-dropping Apple in his complaints about foreign-built smartphones being sold in the US.
In memorial
Australian futures are pointing to a soft start to the week in the antipodes, indicating a 0.4% decline for the S&P/ASX 200 index, after stocks on Wall Street and in Europe were weaker on Friday.
The S&P 500 fell 0.7% and Germany’s DAX 30 dropped 1.5% as investors were rattled by US President Donald Trump’s threat to impose a 50% tariff on the European Union from June and warned Apple it might face a 25% import levy on all foreign-made iPhones sold in America.
“Risk sensitive markets have rebounded in recent weeks, on optimism that of a more benign trade backdrop,” Bank of New Zealand senior interest rate strategist Stuart Ritson said in a note. “However, the threat of aggressive tariffs may well be a ‘negotiating tactic’ and is unlikely to be where tariffs settle over the long run.”
Markets are closed in the US on Monday for the Memorial Day holiday, before Nvidia’s result on Wednesday captures investors’ attention. The semiconductor maker is the last of the Magnificent 7 mega-stocks to report, and is expected to lift March quarter earnings 45% with fellow Big Tech companies maintaining significant spending programmes on artificial intelligence projects.
Black ink
The US earnings season pre-dated Trump’s Liberation Day tariff announcements, which sent markets into a tailspin before whipping back when he backed down on the more punitive stance, and profits have grown at a faster pace than analysts had expected.
Meanwhile, the domestic earnings season gathers pace this week with results due from NZX heavyweights Mainfreight, Infratil, Fisher & Paykel and Ryman Healthcare later this week.
Today, Kiwi Property Group, Eroad and Turners Automotive Group are scheduled to report.
The Reserve Bank’s monetary policy statement on Wednesday is the main event this week, with economists predicting the central bank will cut the official cash rate a quarter-point to 3.25%.
“The easing at this meeting seems reasonable given the weaker global outlook that has eventuated since April (and certainly February),” Westpac New Zealand chief economist Kelly Eckhold said in a note. “However, I think the MPC (monetary policy committee) should be increasingly mindful of the amount of easing already delivered, and the lags to when the peak impact of that easing will take hold.”
The New Zealand dollar fell to 58.79 US cents at 7am in Auckland from 59.15 cents last week.
No major data is scheduled for today.
Reporting by Paul McBeth. Image from Curious News.
