Stock markets in the US and Europe rallied and oil prices eased back amid reports Iran wants to resume talks about its nuclear programme after Israel ratcheted up its attacks, bombing state media buildings in Tehran.
Meanwhile, leaders of the Group of Seven nations are meeting in Canada, where US President Donald Trump will be wooed by his peers seeking lower tariffs in his upending of global trade.
The Bank of Japan kicks off a busy week of central banks reviewing monetary policy, with the US Federal Reserve and Bank of England waiting in the wings.
And Bega Cheese is pushing harder in its bid for Fonterra’s Oceania business, saying it plans to seek regulatory approval for the acquisition.
Good oil
Oil prices eased back from last week’s surge, with Brent crude futures falling 0.4% to US$72.91 a barrel at 7am in Auckland and gold futures were down 1.3% at US$3,408 an ounce as reports emerged that Iran sought to resume talks about its nuclear programme in return for an immediate ceasefire.
“With Israel’s aerial attack dominating, the conflict not spreading to include other countries, and oil infrastructure not targeted, the market has already adopted a sanguine view and risk assets have recovered,” Bank of New Zealand senior market strategist Jason Wong said in a note.
Stocks on Wall Street rallied, with the S&P 500 up 0.9% in late trading, with the tech-heavy Nasdaq Composite up 1.5% as megastocks including Nvidia were back on the rise.
United States Steel gained 5.1% after details of the White House’s golden share emerged over the weekend to allow Japan’s Nippon Steel to buy the American steelmaker for US$14.9 billion. The US government will hold the right to prevent the companies from delaying US$14 billion of investments, shifting production or jobs outside the US, or closing or idling plants.
Betting on growth
Across the Atlantic, stocks were also stronger with the UK’s FTSE 100 index up 0.3%, with gaming firm Entain surging 15% after its US sports betting joint venture with MGM Resorts raised its revenue and earnings outlook.
France’s CAC 40 climbed 0.8%, with Gucci parent Kering climbing 12% after hiring Renault boss Luca de Meoas as its new chief executive.
Meanwhile, leaders of the Group of Seven nations are meeting in Canada, where US President Donald Trump met with Canada’s prime minister Mark Carney, where they’re still trying to find common ground on trade. Trump is expected to be in demand from other leaders hoping to get some concessions on the import levy programme.
The Bank of Japan’s policy meeting today isn’t expected to show any movement in rates, with traders watching the pace of unwinding its bond buying programme. The US Fed and Bank of England also review policy later this week, with no change expected in rates.
Signs of unease
Australian futures are pointing to a 0.1% decline on the S&P/ASX 200 today, while the kiwi dollar climbed to 60.70 US cents at 7am in Auckland from 60.18 cents yesterday.
Local data today include price indicators and house sales for May, following on from a soft services activity gauge on Monday.
“Weakness in Q2 activity indicators to date suggest a question mark over the current pace of growth, and will give the RBNZ food for thought on its next policy move in July – whether to pause or not – with higher inflation added to the mix,” BNZ’s Wong said, referring to the Reserve Bank.
Meanwhile, Australia’s Bega Cheese yesterday said it plans to seek informal approval from the Australian Competition and Consumer Commission to buy Fonterra Oceania, although the New Zealand dairy exporter has said it’s not planning on selling its consumer businesses in pieces. Bega was locked out of the data room and is at odds with Fonterra over how their licensing agreement is treated through the sale.
Reporting by Paul McBeth. Image from Firmbee.com on Unsplash.