US trade talks are back on the agenda after President Donald Trump cut negotiations with his Canadian neighbour over its digital services taxes on major American tech companies.
Meanwhile, Chinese and US relations have warmed with US Treasury secretary Scott Bessent ironing out some issues over imports of Chinese rare minerals.
Wall Street surged to new records on Friday as a revival in discount stores Dollar General and Dollar Tree joined the Magnificent 7 in driving gains through the latter half of the June quarter.
Locally, New Zealand’s latest gauge of business confidence is coming today from ANZ, while the quarterly survey from the New Zealand Institute of Economic Research is due tomorrow.
Trade is back
US President Donald Trump cut off trade talks with Canada on Friday over the smaller nation’s digital services tax on big tech companies, calling them a “blatant attack” and saying he’ll set a tariff on Canadian imports within the week.
New Zealand dropped its proposed digital services tax earlier this year, which was to be a backstop in case the OECD’s efforts to clamp down on multinational tax structures failed to get its members on board. The Group of Seven nations agreed to exclude US tech companies from some of those proposed measures.
Meanwhile, US Treasury secretary Scott Bessent ironed out some issues over shipments of rare minerals from China, with the world’s two biggest economies confirming details of the framework to implement their trade negotiations.
Bessent was confident the bulk of the major trade deals can be reached by the Sept 1 Labor Day holiday.
The conflicting trade messages whipped stock markets around on Friday, although Wall Street hit new highs, with the S&P 500 up 0.5% and the Dow Jones Industrial Average advancing 1%.
More than tech
The Magnificent 7 megacap stocks including Nvidia have driven the recovery in the major Wall Street indices, although sharp increases from discount retailers such as Dollar Tree and Dollar General have helped pace those gains.
European stock markets were also stronger on Friday, with the UK’s FTSE 100 up 0.7% and Germany’s DAX 30 advancing 1.6%.
US jobs figures and the passage of Trump’s tax and spending programme through the legislature are in view for investors this week, with Wall Street closed on Friday for the US Independence Day holiday.
Australian futures are pointing to a 0.1% gain for the S&P/ASX 200 index when it opens, while the kiwi dollar traded at 60.56 US cents at 7am in Auckland from 60.61 cents last week.
New Zealand’s S&P/NZX 50 index is on track to gain 2.6% in the June quarter, with the quarterly tweaks to portfolios expected to drive trading today. Cervical cancer diagnostics firm TruScreen is due to report its annual result today.
Local business confidence surveys will be closely watched to see whether there might be any souring of sentiment to spur on an earlier or steep rate cut by the Reserve Bank. The ANZ’s monthly business survey is due today, while the NZIER’s quarterly survey of business opinion will come out on Tuesday.
“It seems likely it would take a lot to budge the market from its belief that an on-hold decision by the RBNZ in July is a done deal, but if there is a meaningful change in perceived odds it could impact the currency,” ANZ Bank NZ economists said in a note. “The survey is important for its capacity indicators that go directly into the RBNZ’s estimate of the output gap and thus medium-term inflation pressures.”
Reporting by Paul McBeth. Image from Jason Hafso on Unsplash.