US tech rally continues as Cisco soars

Wall Street’s tech-heavy Nasdaq Composite continued its march higher, with Cisco Systems among the leaders on the day and heavyweight chipmaker Nvidia powering gains as the dominant artificial intelligence trade remains in place for the likes of local firms such as Infratil.

US President Donald Trump’s trip to China to meet his counterpart Xi Jinping completed its first day of talks, with the leaders of the world’s two biggest economies agreeing that the Strait of Hormuz should be freely open, with oil prices nudging up and keeping pressure on carriers such as Air New Zealand, which hit a new low yesterday.

The kiwi dollar gained against a weaker British pound as UK prime minister Keir Starmer faces a challenge to his leadership after Labour MP’s resignation and looming byelection opened the door for Manchester mayor Andy Burnham to return to Westminster as a potential rival while health secretary Wes Streeting resigned his ministerial warrant and called for a broad contest.

The upbeat sentiment is set to flow through to the antipodes, with Australian futures pointing to a positive start to the trading day for the ASX, while local data today include the BNZ-BusinessNZ manufacturing activity gauge and Statistics New Zealand’s partial inflation reading, which will capture the initial impact of the Middle East conflict.

Tech wave

The Dow Jones Industrial Average rose 0.8% in late trading, with a 13% jump for Cisco leading the blue-chip index higher on the tech company’s plans to cut thousands of jobs to rollout AI through its business.

Nvidia helped power those gains with a 4.7% gain in late trading and the Nasdaq was up 1% in late trading as the tech rally continued. The ebullient mood about AI was captured in chipmaker Cerebras Systems’ initial public offering, with the firm’s shares surging 70% in its debut, having raised US$5.5 billion.

Local favourite Rocket Lab extended its run of gains for a fifth day, up 6% at US$131.63 in late trading.

European markets were also stronger, with the UK’s FTSE 100 up 0.5%, Germany’s DAX gaining 1.3% and France’s CAC 40 gaining 0.9%.

“With all three major US indexes up around 0.7% with one hour until the closing bell, the NZX50 looks set for a firmer start after three straight losing sessions,” Moomoo market strategy consultant Greg Boland said in a note. “Lower volatility, stronger market breadth and renewed buying in technology should support local sentiment at the open.”

Australian futures are pointing to a 0.7% gain for the S&P/ASX 200 index when trading opens, having snapped losing streak on Thursday as Commonwealth Bank of Australia bounced back from a sharp slide and BHP hit a new record.

Local flavour

Tech names will be in view on both sides of the Tasman after Xero was sold off sharply on Thursday after investors looked through a strong earnings result, focusing on the expensive push in the US.

“Local attention today should focus on Infratil, Vista Group International and Gentrack Group after the strong US tech lead, while exporters and airlines remain sensitive to oil prices and China-related headlines,” Moomoo’s Boland said.

Brent crude oil futures rose 0.4% to US$106.05 a barrel after presidents Trump and Xi agreed that the Strait of Hormuz should be freely open in the first day of their two-day summit in Beijing.

Air NZ sank to an all-time low on an adjusted basis yesterday after warning of another hit to its earnings on soaring jet fuel costs, while Singapore Airlines said raising airfares alone won’t offset the increase fuel costs after reporting a lift in profit for the March year.

The kiwi dollar traded at 59.18 US cents at 7am from 59.32 cents yesterday and gained to 44.14 British pence from 43.85 pence yesterday as UK prime minister Starmer faces mounting threats to his leadership.

Jason Wong, senior market strategist at Bank of New Zealand, said markets fear that replacing Starmer would lead to looser fiscal policy with bigger deficits and increased debt.

Local data today include Stats NZ’s selected prices index for April, coming after the Reserve Bank’s survey of expectations showed managers anticipate a spike in short-term inflation but were more sanguine over the longer term. The performance of manufacturing index is also due, with softer activity expected due to the Middle East conflict.

Reporting by Paul McBeth. Image from Albert Stoynov on Unsplash.