US-Iran tensions back to the fore as NZ returns from long weekend

Tensions between the US and Iran are back to the fore as US President Donald Trump repeated that the ceasefire is over amid a fresh wave of strikes over the weekend and disputed claims that the Strait of Hormuz is closed to shipping traffic, even as peace negotiations continue in the background.

New Zealand’s NZX returns from the long Matariki weekend with Australian futures pointing to a positive start for the ASX and following broadly upbeat Friday, which marked South Korean semiconductor firm SK Hynix’s stellar debut on Wall Street.

Japan’s Nikkei 225 and the yen rallied on Friday after the nation’s finance minister Satsuki Katayama encouraged pension funds and households to invest more of their money at home.

US company earnings will come to the fore this week, with the major banks kicking off the season on Tuesday in New York when the likes of JPMorgan Chase, Bank of America and Goldman Sachs report.

Familiar themes

Brent crude oil futures eased 0.4% to US$76 a barrel heading into the weekend before the latest round of retaliatory strikes in the Middle East, as the US attacked military targets and some infrastructure in Iran and the Islamic Republic fired drones and missiles at various countries across the Persian Gulf.

US President Trump said the Strait of Hormuz remained open, while Iran’s Revolutionary Guard has said the channel is closed to shipping traffic.

Meanwhile, longtime South Carolina Republican Senator Lindsey Graham, an influential adviser to the president, has died, aged 71.

The S&P/NZX 50 index will be playing catch up after gains for most markets on Friday in Australia, Asia, Europe and the US.

The latest flare-up in the Middle East may temper domestic markets, which are the first to open, after positive trading around the world on Friday, said Moomoo market strategy consultant Greg Boland.

“The NZX is expected to open mixed on Monday after a strong shortened trading week, with renewed conflict between the United States and Iran continuing to support oil prices and inject geopolitical uncertainty into global markets,” Boland said in a note. “While Wall Street finished Friday in positive territory, investors remain cautious over developments in the Strait of Hormuz, where military action continues to disrupt shipping.”

Wall Street was buoyed by a strong debut from SK Hynix, which climbed more than 13% in the US$26.5 billion initial public offering. The share sale was the biggest by a foreign company on the US exchanges. The Dow Jones Industrial Average and Nasdaq Composite were both up 0.3% on Friday, while the S&P 500 gained 0.4%.

Earnings season kicks off this week with the major US banks at the front of the queue. Analysts forecast quarterly earnings growth of 24% by S&P 500 companies, according to data compiled by FactSet.

AI moves

Meanwhile, artificial intelligence developers OpenAI, SpaceXAI and Meta Platforms released new models last week, emphasising their competitive pricing, while Apple filed a lawsuit in California accusing OpenAI and two of its employees of stealing hardware designs.

The UK’s FTSE 100 advanced 0.2% on Friday, with Vodafone Group jumping 13% after French billionaire Xavier Niel agreed to buy a 16% stake of the telecommunications company from Emirates Telecommunications Group. Germany’s DAX dipped 0.2% and France’s CAC 40 increased 0.2%.

Meanwhile, Ukraine President Volodymyr Zelenskyy dismissed prime minister Yulia Svyrydenko in a cabinet reshuffle as the nation steps up aerial strikes on Russia.

And Japan’s Nikkei 225 climbed 1.2% on Friday, while the yen rallied against the greenback after finance minister Katayama namechecked the US$1.8 trillion Government Pension Investment Fund in urging households and pension funds to direct more of their investment domestically.

Jason Wong, senior markets strategist at Bank of New Zealand, said the comments caught the market’s attention given a shift in asset allocation would put upward pressure on US treasury yields if Japanese investors were to sell.

The kiwi dollar rose to 93.39 yen at 7am in Auckland from 93.08 yen on Thursday, and advanced to 57.72 US cents from 57.26 cents on Thursday.

Australian futures are pointing to a 0.5% gain for the S&P/ASX 200 index when trading opens across the Tasman, following a 0.5% increase on Friday to snap a four-day losing streak.

Local data today include the BusinessNZ-BNZ performance of services index, following a strong recovery in activity in the sister manufacturing survey last week.

Reporting by Paul McBeth. Image from Sunira Moses on Unsplash.