The Reserve Bank of New Zealand is expected to keep its key rate unchanged at today’s policy meeting, coming a day after Australia’s central bank blindsided investors across the Tasman who were expecting another cut.
Meanwhile, stocks on Wall Street were muted as investors prepare for the next wave of letters from US President Donald Trump to his nation’s trading partners outlining what level of tariff they can expect.
Copper and pharmaceuticals are next in line to have import levies slapped on them by the White House, pushing the precious metal price to a record and buoying US miner Freeport-McMoran.
And solar companies such as SolarRun and First Solar extended their declines after Trump issued an executive order to tighten eligibility for renewable energy tax credits that his big and beautiful tax and spending law is phasing out.
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New Zealand’s Reserve Bank is widely expected to keep the official cash rate at 3.25% at today’s review, having cut the benchmark rate at the past six meetings. Last month’s decision to lower the rate had a dissenting vote, with one member of the monetary policy committee wanting to see how global uncertainties played out.
“Forecasts won’t be updated, and we expect a short policy assessment that keeps the bank’s options open regarding future policy decisions,” Bank of New Zealand senior market strategist Jason Wong said in a note. “With the market pricing about 40 basis points of further cuts, a neutral statement would likely come across as hawkish for those expecting a nod toward further easing.”
The kiwi dipped to 60 US cents at 7am in Auckland from 60.18 cents yesterday.
The local central bank review follows a surprise decision by the RBA to keep its cash rate at 3.85% on Tuesday, wrong-footing economists who’d predicted a cut and prompting Australian Treasurer Jim Chalmers to express some frustration at the decision. The kiwi traded at 91.88 Australian cents from 91.99 cents yesterday.
Meanwhile, stocks on Wall Street nudged lower with the S&P 500 in negative territory and the Dow Jones Industrial Average down 0.3% in late trading after US President Donald Trump put copper and pharmaceuticals in his tariff sights.
Heavy metal
Copper prices surged after Trump signalled plans to impose a 50% tariff on imports the precious metal. Miner Freeport-McMoran was up 3.5%, while OceanaGold Corp – which mines copper at its Didipio site in the Philippines – was down 2.8%.
Trump said he also plans to impose a 200% import levy on pharmaceuticals, although that sector will get a year-and-a-half to shift manufacturing to the US.
US commerce secretary Howard Lutnick said the president will send another batch of letters to trading partners outlining the tariff rates they’ll face from August.
And Trump said the Brics bloc of nations, Brazil, Russia, India, China and South Africa, will face an extra 10% tariff, accusing the developing economies of threatening the primacy of the US dollar as the world’s reserve currency.
Meanwhile, clean energy companies including SunRun and First Solar were weaker after Trump signed an order to limit the eligibility for the Joe Biden-era renewable energy tax credits which the new administration is phasing out. Infratil’s LongRoad Energy business has also been a past beneficiary of the scheme.
Across the Atlantic, European stock markets were broadly stronger with the UK’s FTSE 100 index up 0.5% and Germany’s DAX 30 and France’s CAC 40 both gaining 0.6%.
No local data is scheduled for today.
Reporting by Paul McBeth. Image from James Coleman on Unsplash.
