The New Zealand dollar nudged lower as US President Donald Trump has given Iran time to rethink its nuclear programme as Israel continues its bombardment of the Middle Eastern nation.
European stock markets were weaker amid the general unease, with Wall Street closed for the Juneteenth public holiday, while oil prices remained elevated on fears supply could be disrupted, buoying energy giants BP and Shell.
The Bank of England kept its key rate unchanged as it weighs up the UK’s labour market and broader concerns about the global tensions, while Norway’s Norges Bank was the only central bank to surprise investors in a slew of decisions when it cut its benchmark rate.
New Zealand’s NZX is closed for the Matariki public holiday, having eked out a 0.1% gain this week despite the past three days of declines, while Australia’s ASX is poised to turn lower when trading opens on Friday.
Black gold
Brent crude oil prices rose 2.7% to US$78.74 a barrel on Thursday, with futures prices still elevated as investors remain nervous about the heightened tensions in the Middle East, where Israel continued its attacks on Iran.
US President Donald Trump will make a decision within two weeks on whether to join Israel’s bombardment, giving Iran the chance to resume negotiations about its nuclear programme. Trump previously called for an unconditional surrender.
Wall Street was closed for the Juneteenth public holiday, although S&P 500 futures are pointing to a 0.9% decline when trading resumes on Friday, while stock markets in Europe were weaker.
The UK’s FTSE 100 index fell 0.6%, with energy giants staving off a steeper decline as BP gained 1.7% and Shell advanced 1.2%. Germany’s DAX 30 declined 1.1% and France’s CAC 40 dropped 1.3%.
Reuters reported European officials are increasingly resigned to a baseline 10% tariff from the US in their negotiations with the world’s biggest economy, with the US now generating revenue from the import levies.
Central decisions
The Bank of England was the last of the big three central banks meeting this week to unveil its policy decision, keeping its key rate unchanged at 4.25% as policymakers continue to weigh up an increasingly soft jobs market and the threat of inflation posed by rising oil prices.
Among other central banks reviewing their policy, Norway’s Norges Bank surprised markets by cutting its key rate a quarter-point to 4.25% as inflation came in softer than expected, with its forecasts suggesting the benchmark rate will fall below 4% by the end of the year ending around 3% toward the end of 2028. That was the first move lower in five years.
The Swiss National Bank cut its key rate to zero as expected, and the Philippines’ central bank also delivered a quarter-point reduction in line with expectations, while central banks in Turkey and Taiwan kept their rates unchanged.
The kiwi dollar extended its decline, nudging down to 59.86 US cents at 7am in Auckland from 59.94 cents yesterday.
Holiday
New Zealand markets are closed for the Matariki public holiday today, while prime minister Christopher Luxon meets China’s President Xi Jinping as he wraps up his three-day visit to the world’s second biggest economy.
The S&P/NZX50 fell for a third session on Thursday, but still managed to gain 0.1% this week after a strong rally on Monday. Trading volumes were heavy yesterday as index-tracking investors reshuffled their portfolios ahead of new weightings on some indices starting on Monday.
Australian futures are pointing to a 0.3% decline for the S&P/ASX 200 today as the soft lead from Europe hangs over investors.
Reporting by Paul McBeth. Image from Deniz Demirci on Unsplash.
