Stocks on Wall Street retreated as the US Federal Reserve kept its key rate unchanged, while leaving the door open to cuts through the second half of the year provided the jobs market cools down or the White House’s tariff regime doesn’t push up prices as much as feared.
Traditional payments firms Mastercard and Visa were at the bottom of the leaderboard, while crypto exchange Coinbase and Circle Internet rallied after the US Senate passed legislation to regulate digital currencies.
Meanwhile, US President Donald Trump remained coy on whether he’ll approve joining Israel’s bombing campaign on Iran’s nuclear capabilities, while Iranian supreme leader Ayatollah Ali Khamenei rejected the call for an unconditional surrender.
And Statistics New Zealand is due to release March quarter gross domestic product figures, which are expected to show the domestic economy grew 0.7% in the period.
Staying the course
The Fed kept the federal funds rate unchanged in a range of 4.25%-to-4.5% as expected, while indicating two cuts may come in the second half of the year if central bankers see a softening in the labour market or a muted price response to the White House’s tariff regime.
“Policy makers have reduced their estimates for growth and lifted inflation projections,” Bank of New Zealand senior interest rate strategist Stuart Ritson said in a note. “They are waiting for greater clarity on how the administration’s policies will affect inflation and the economy.”
Sweden’s Riksbank cut its benchmark rate to 2% as expected, weighing on the Swedish kroner, while the Bank of Indonesia kept its rate unchanged at 5.5% as central bankers continue to weigh up the global environment.
Stocks on Wall Street dipped into the red after the announcement, with the S&P 500 down 0.1% in late trading, while European stock markets were weaker ahead of the central bank review, with Germany’s DAX 30 down 0.5%.
Payments companies were among the biggest decliners on Wall Street after policymakers in the US Senate upper house passed legislation regulating cryptocurrencies. Mastercard fell 4.9%, Visa dropped 4.2% and ecommerce payments firm Paypal fell 3.9%, while crypto stocks rallied, with Coinbase climbing 15% and the recently listed Circle Internet surged 31%. Bitcoin fell 1% to US$103,657.
Off the top rope
TKO Group Holdings, which owns the Ultimate Fighting Championship and World Wrestling Entertainment, gained 5.3% after getting some upbeat comments from two analyst reports this week.
Two new initial public offerings in New York started strongly, with insuretech Slide Insurance surging 24% on its debut and diagnostics firm Caris Life Sciences climbing almost 29%.
Global markets remained on edge as the Israel-Iran conflict went into its sixth day, with US President Donald Trump keeping his cards close to his chest on whether he’ll order a US strike on the Middle East nation. Iran’s Ayatollah Ali Khamenei rejected Trump’s call for an unconditional surrender.
Oil prices remained elevated, although they’ve come off their highs with Brent crude oil futures down 0.1% at US$76.66 a barrel.
New Zealand’s foreign minister Winston Peters urged New Zealanders in Israel and Iran to leave those countries if they can do so safely, and said the government is exploring evacuation options once it’s safe to do so.
Prime Minister Christopher Luxon continues his trip in China, meeting party secretary of Shanghai, Chen Jining, today before talks with Premier Li Qiang and President Xi Jinping on Friday in Beijing.
Reserve currencies
Meanwhile, People’s Bank of China governor Pan Gongsheng outlined a plan for a global financial system that relies on several major currencies, rather than just the US dollar.
The kiwi dollar traded at 60.22 US cents at 7am in Auckland from 60.33 cents yesterday.
Australian futures are pointing to a 0.2% decline for the S&P/ASX 200 index in the uncertain environment, while New Zealand’s market will likely see some positioning ahead of index rebalancings with the NZX closed on Friday for the Matariki public holiday.
Stats NZ is due to release March quarter GDP figures today, which economists predict will show economic growth of 0.7% in the period.
BNZ’s Ritson said that’s faster growth than the Reserve Bank’s 0.4% forecast in the May monetary policy statement.
“However more timely activity indicators, like the PMIs released over the past week, point towards weaker activity in Q2,” he said.
Reporting by Paul McBeth. Image from Art Rachen on Unsplash.
