Trump ups ante over Greenland as Davos looms
New Zealand prime minister Christopher Luxon will outline his state of the nation today.
The antipodean markets are waking up to the week with US President Donald Trump ramping up the rhetoric in his trans-Atlantic stoush, threatening to impose tariffs on several European nations in his bid to add Greenland to the republic ahead of his keynote speech to the World Economic Forum on Wednesday.
Stocks on Wall Street were marginally weaker on Friday before the long weekend in the US in a mixed start to the corporate earnings season, while yields on US treasuries rose on expectations former Federal Reserve governor Kevin Warsh will get the top job after Trump said he’s keen to keep White House economic adviser Kevin Hassett in his current position.
The staff class action against Kiwi-born fintech FNZ had a spanner thrown in the works with the Cayman Grand Court ruling that there wasn’t a quorum for the Kiwi GP CayCo’s board meeting when the entity decided to take the suit, although the judge made clear the firm from having another go at pursuing a claim.
And New Zealand prime minister Christopher Luxon will kick off the political year with a state of the nation speech in Auckland, where he’s expected to announce the date of the general election.
Green eyes
Australian futures are pointing to a marginally weaker start to the week for the S&P/ASX 200 index when trading opens across the Tasman, while the kiwi dollar fell to 57.52 US cents at 7am in Auckland from 57.57 cents as investors digest the latest ratcheting up of trans-Atlantic tensions.
US President Donald Trump said he’ll impose a 10% tariff on goods from Denmark, Norway, Sweden, France, Germany, the UK, the Netherlands and Finland as he attempts to increase the pressure on European leaders to smooth an acquisition of Greenland. The levy is set to come into effect on Feb 1 and rise to 25% in June.
European Union leaders are holding an emergency meeting in Brussels to work out a response to the White House and have warned the continental bloc may pause ratifying a trans-Atlantic trade deal, while French President Emmanuel Macron is said to be pushing for the group’s anti-coercion tools to be used, which would restrict imports into the region.
“Buoyant risk sentiment will get tested to start the week after President Trump said he will impose 10% tariffs on European countries from next month until they support his ambition to acquire Greenland,” Bank of New Zealand senior interest rate strategist Stuart Ritson said in a note. “The new tariffs would represent an escalation in global tensions though it is not clear if they will be implemented and what legal authority Trump would use.”
The heightened tensions came ahead of the World Economic Forum in Davos, where Trump is due to speak on Wednesday and expected to discuss housing and affordability. Last week, Trump said he planned to ban institutional investors from buying single-home properties to help improve affordability.
Mixed earnings
US and European stock markets had been choppy heading into the long weekend, with small declines for the major indices on Friday after a mixed week of corporate earnings. Wall Street’s Russell 2000 index of small companies extended its run of outperforming the S&P 500 on Friday, with investors turning their eyes to smaller companies on the bourse.
Meanwhile, yields on 10-year US treasuries rose 6 basis points to 4.23% after Trump said he might keep Kevin Hassett in his role as National Economic Council director as he mulls over who to replace Fed chair Jerome Powell. Former Fed governor Kevin Warsh is now seen as the leading candidate for the job.
Locally, prime minister Christopher Luxon is set to deliver a state of the nation address in Auckland today, kicking off the political year in what’s expected to reveal the date of the general election and defend the coalition government’s performance on law and order, education and reform.
And the Investment News NZ website today reported that the Cayman Grand Court handed FNZ an early victory in its dispute with employee-shareholders taking a representative action against the fintech, ruling a board meeting by Kiwi GP CayCo didn’t have a quorum when deciding to pursue the action. Still, the judge made clear that Kiwi GP can still pass resolutions to continue the action in New Zealand’s High Court.
Reporting by Paul McBeth. Image from Aningaaq Rosing Carlsen on Unsplash.
This story has been updated to remove references to the BNZ-BusinessNZ PSI being due on Monday. The services index is published on Tuesday.
