US airlines rally on robust demand as Wall St stays upbeat

Stock markets on Wall Street and in Europe rallied for a second day as fears about the Middle East conflict continued to subside, with odds on a ceasefire in the coming months Polymarket prediction markets getting shorter, as Israel killed Iran’s security chief Ali Larijani and US national counterterrorism head Joe Kent resigned over the war.

Carriers gave a strong lead for trans-Tasman carriers Air New Zealand and Qantas Airways with Delta Air Lines and American Airlines leading a rally as they raised their revenue outlooks on robust bookings, despite the rising cost of jet fuel.

Nvidia nudged higher after chief executive Jensen Huang dangled a US$1 trillion projection on chip sales through until 2027, while Asian automakers including Hyundai Motor and Nissan Motor rallied on the world’s most valuable company expanding its autonomous driving partnership with them.

And that positive sentiment is set to carry through into the antipodes with the kiwi dollar rallying and futures implying a gain for the S&P/ASX 200 index when trading opens across the Tasman, with Statistics New Zealand’s balance of payments due today after a mixed auction at the latest Global Dairy Trade event.

Calmer waters

US and European markets retained their sense of calm as the conflict in the Middle East continues to keep oil prices elevated, with Brent crude oil futures at US$102.83 a barrel at 7am in Auckland.

Prediction markets priced in improved odds on a ceasefire in the coming months, with Polymarket pricing implying a 41% chance of an end to the conflict by the end of April and a 50% chance by the end of May.

US President Donald Trump lashed allies for rebuffing his call for aid in securing the Strait of Hormuz – where a trickle of vessels are managing to navigate the conflict zone – while his counterterrorism chief Joe Kent resigned with immediate effect in protest over the war.

Israel claimed to have killed Iranian security head Ali Larijani, while the United Arab Emirates said a drone struck the Shah oilfield and closed its airspace over drone strikes, further disrupting travel from Dubai.

“The Iran conflict continues to occupy attention, although market movements have been modest over the past 24 hours,” Bank of New Zealand senior markets strategist Jason Wong said in a note. “Investors are seemingly awaiting further developments before deciding on the next big move.”

Bonds rallied as the yield on US 10-year treasuries fell 4 basis points to 4.2% ahead of the Federal Reserve’s policy review, which is expected to keep the federal funds rate in a range of 3.5%-to-3.75%.

The Reserve Bank of Australia hiked its target cash rate a quarter-point to 4.1% yesterday in a split decision, with the Lucky Country dealing with inflationary pressures that predated the Middle East conflict.

Central banks in Canada, Europe, the UK and Japan are also set to review monetary policy this week.

Everything’s fine

Stocks on Wall Street rose for a second day, with the S&P 500 up 0.4% in late trading, while the tech-heavy Nasdaq Composite advanced 0.6%. The blue-chip Dow Jones Industrial Average was up 0.3% in late trading, led by IBM, Walt Disney Co and Goldman Sachs Group.

Airlines set a positive lead for domestic carriers after Delta and American Airlines raised their revenue outlooks on strong forward bookings, while budget brands JetBlue Airways and Frontier Airlines were set to benefit from travellers seeking bargains.

Nvidia was modestly higher after CEO Huang said the chipmaker had a strong sales outlook through this year and the next, while extended autonomous vehicle partnerships with Asian carmakers buoyed the auto firms.

European markets were also stronger, with the UK’s FTSE 100 up 0.8%, Germany’s DAX gaining 0.7% and France’s CAC 40 advancing 0.7%.

That’s set to continue into the local trading session, with futures pointing to a 0.3% gain for the ASX200 when trading opens across the Tasman, while the kiwi dollar rose to 58.65 US cents from 58.43 cents yesterday.

The S&P/NZX 50 index has a few headwinds in the form of companies going ex-dividend, including heavyweight Auckland International Airport, Vector and the stock market operator NZX.

Local data today include Stats NZ’s balance of payments, which is expected to show a narrowing of the current account deficit to its smallest level in four-and-a-half years. Westpac’s quarterly consumer confidence survey is also due.

That comes after the latest GDT auction showed a 0.1% increase in the GDT price index, with an average winning price of US$4,330 a tonne. Still, whole milk powder prices dropped 4% to US$3,709/tonne.

Reporting by Paul McBeth. Image from Miguel Ángel Sanz on Unsplash.