Softer US services activity cast a pall over Wall Street, with stock markets broadly weaker as investors continue to weigh up whether the Federal Reserve will cut interest rates as aggressively as they’d like.
Meanwhile, the US trade deficit narrowed in June as the effects President Donald Trump’s new world trade order start to bite, with new tariffs coming for semiconductors and pharmaceuticals in the next week or so.
Sharesies’ favourite Palantir Technologies extended its gains after lifting June quarter earnings more than 50% as the data analysis firm enjoyed the patronage of a White House wanting costs to be cut and greater use of artificial intelligence.
And New Zealand’s June quarter employment figures are expected to show a pick-up in the unemployment rate and subdued wage inflation, keeping alive expectations for the Reserve Bank to cut the official cash rate.
Bad service
Stocks on Wall Street were weaker, with the S&P 500 slipping 0.4% in late trading after a softer-than-expected reading from the ISM services survey, showing a small expansion in activity, with the sub-indices reporting shrinking employment and rising costs.
“The data plays to the view that US inflation will remain sticky and economic growth momentum is weakening, as was clearly evident in last week’s data releases, including GDP figures for those willing to look past the headline bounce,” Bank of New Zealand senior markets strategist Jason Wong said in a note.
Weak US jobs data last week raised expectations the Federal Reserve will have to lower the federal funds rate, and investors are turning their mind to who the White House will appoint to the federal open market committee after its latest resignation.
Separately, US trade data showed a narrowing of the nation’s trade deficit, due largely to a sharp decline in consumer imports in June, as President Donald Trump’s wide-ranging tariff plans started to effect shipping behaviour.
Trump said he plans to announce tariffs on semiconductors and pharmaceuticals in the next week or so.
The kiwi dollar traded at 58.94 US cents at 7am in Auckland from 58.98 cents yesterday.
US corporate earnings season continued with Palantir surging 6.5% after reporting a 53% increase in June quarter earnings, and crossing the US$1 billion quarterly revenue mark for the first time. The company has been a beneficiary of the Trump administration, securing federal government deals to help cut costs and implement greater use of AI technologies.
Out of love
Meanwhile, Hims & Hers slumped after missing earnings expectations, having broken up with Ozempic-maker Novo Nordisk over its sale of copycat weight-loss drugs.
Pfizer rallied after beating earnings expectations, while equipment maker Caterpillar nudged higher as it reported a mixed result, with tariffs expected to slice up to US$1.5 billion from its annual bottom line.
Stocks across the Atlantic were generally stronger, with the UK’s FTSE 100 index up 0.2% and Germany’s DAX 30 gaining 0.4%.
Liquor company Diageo climbed 4.9% after forecasting flat sales for 2026 and lifting its target to cut costs, while oil major BP advanced 2.8% after beating profit expectations, saying it’s reviewing how to best develop oil and gas production assets and is considering more savings to boost shareholder returns.
Local data today include June quarter employment figures, which are expected to show the unemployment rate rose to 5.3% and subdued wage inflation.
The Reserve Bank is reviewing monetary policy later this month, with traders almost fully pricing in a 25 basis point cut to the 3.25% official cash rate.
Cancer diagnostics firm Pacific Edge is holding its annual meeting in Auckland today, having raised $20.7 million from a placement and share purchase plan in recent weeks.
Meanwhile, earnings season picks up a little pace across the Tasman with News Corp, REA Group, Pinnacle Investment Management Group and AMP among those reporting.
Australian futures are pointing to a 0.2% gain for the S&P/ASX 200 index when trading opens.
Reporting by Paul McBeth. Image from Sam Moghadam on Unsplash.
