The bond market settled down and stocks on Wall Street resumed their upward trajectory after US President Donald Trump’s big, beautiful tax and spending package cleared the House of Representatives in a tight vote.
That legislation now goes to the Senate, and NZX-listed Infratil will be watching closely with the bill ending Joe Biden-era tax credits on renewable energy projects, of which the infrastructure investor’s Longroad unit has been a beneficiary.
And the local stock exchange’s biggest company, Fisher & Paykel Healthcare will also be in view with Jefferies downgrading its rating on the medical device maker.
Meanwhile, as people pore through the details of yesterday’s government budget, retail sales data are scheduled for today and the shoulder earnings continues with Metro Performance Glass due to report.
Mounting deficits
The Republican-led US House of Representatives passed President Donald Trump’s expansive tax and spending package, which extends old tax breaks and introduces new ones, alongside cuts elsewhere.
The package has injected volatility in bond markets in recent days since Moody’s Ratings cut the triple-A credit rating on the US to Aa1 over the prospect of mounting federal government deficits and growing debt.
The yield on 10-year US Treasuries fell 3 basis points to 4.56%, while the kiwi dollar dropped to 59.01 US cents at 7am in Auckland from 59.32 cents yesterday.
“US equities have traded higher, as treasury yields retraced from the recent highs, and economic data suggested the economy remained resilient in the face of tariff uncertainty,” Bank of New Zealand senior interest rate strategist Stuart Ritson said in a note. “Fiscal concerns and the prospect of elevated supply continue to contribute to bond market volatility.”
Stocks on Wall Street rallied, with the S&P 500 up 0.5% in late trading and the tech-heavy Nasdaq Composite advancing 0.9%.
We live in public
Virtual physical therapy firm Hinge Health jumped almost 17% on its New York Stock Exchange debut, providing more confidence for a return to initial public offerings after the market disruption caused by Trump’s waxing and waning tariff programme. Advertising software platform MNTN surged 57% in its debut.
It was more downbeat across the Atlantic, where the UK’s FTSE 100 index slid 0.5% and Germany’s DAX 30 declined 0.5%.
The antipodes are looking more optimistic with Australian futures pointing to a 0.4% increase for the S&P/ASX 200 index.
However, heavyweights Fisher & Paykel Healthcare and Infratil might cast a pall over New Zealand’s NZX, with the medical device maker downgraded to a ‘hold’ from a ‘buy’ rating by investment bank and research house Jefferies, which retained its price target of $39.40.
And for Infratil, Trump’s tax and spending package will end tax credits for clean energy projects earlier than indicated in a previous draft. The infrastructure investor will report its annual earnings next week.
Local data today include March quarter retail sales, which are expected to show flat consumer spending in the period.
Meanwhile, earnings season continues with Metro Performance Glass due to report its annual result.
Reporting by Paul McBeth. Image from Seth Abramczyk on Unsplash.
