Wall St bounces as Trump ups ante on Fed; French stocks sink
Ebos and Meridian are the local heavyweights reporting today.
US President Donald Trump’s latest broadside at the Federal Reserve in seeking to oust governor Lisa Cook injected some volatility in currency and bond markets, but Wall Street largely rode it out with small gains for the major indices.
Nvidia nudged higher ahead of its quarterly earnings result on Wednesday in the US, which is being closely watched for a gauge on the artificial intelligence sector, with options traders predicting some big ovements for the chipmaker.
Meanwhile, French stocks declined with lenders BNP Paribas, Societe Generale and Credit Agricole sliding as the minority government’s future is looking bleak ahead of a confidence vote next month.
And the local earnings season continues with Meridian Energy and Ebos Group the heavyweights lined up to report today.
Fed woes
The yield on US 10-year Treasuries fell 5 basis points to 4.26% on the prospect of another low rate advocate joining the Federal Reserve after President Donald Trump said he plans to push governor Lisa Cook over allegations of mortgage fraud. Cook has refused to resign, saying there’s no cause for her ouster.
The kiwi dollar rose to 58.60 US cents at 7am in Auckland from 58.40 cents yesterday.
“The prevailing view is that this was another attempt by Trump to undermine the independence of the Federal Reserve, alongside recent public attacks and threats on chair (Jerome) Powell,” Bank of New Zealand senior markets strategist Jason Wong said in a note. “Firing Cook gives Trump another opportunity to nominate someone friendly to his policy agenda of lower rates.”
US Treasury secretary Scott Bessent defended the move, saying Trump is restoring trust in the Fed.
Wall Street took the latest machinations in its stride, with the S&P 500 up 0.2% in late trading, led by drugmaker Eli Lilly, which climbed 4.9% after saying its weight-loss pill cuts body weight by 10.5% in diabetes patients.
Nvidia advanced 1.3% ahead of its quarterly earnings result after the bell on Wednesday in the US, which is being watched to gauge the pace of growth in the AI sector, where lofty valuations are coming into question.
Options traders expect a 6.2% swing either way in Nvidia’s price after the result, with the most actively traded contracts being options pegged to the stock jumping to US$190-to-US$200, the Wall Street Journal reported.
Meanwhile, defence stocks including Lockheed Martin and Northrop Grumman gained after US commerce secretary Howard Lutnick said the administration is reviewing how it works with defence contractors.
A French affair
Stock markets were weaker across the Atlantic, with France’s CAC 40 sinking 1.7% as investors brace for the minority government losing a confidence vote next month after the three main opposition parties said they wouldn’t support prime minister Francois Bayrou over his plan for broad budget cuts. French banks paced the declines as BNP Paribas fell 4.2%, Societe Generale dropped 6.8% and Credit Agricole slid 5.4%.
The UK’s FTSE 100 index fell 0.6% as it returned from a public holiday and Germany’s DAX 30 declined 0.5%.
The local earnings season continues with Meridian Energy coming hot on the heels of a disappointing result from Genesis Energy on Tuesday. The country’s biggest electricity generator is expected to report its worst year after the 2024 winter shortage, but analysts anticipate upbeat guidance due to healthy hydro lake storage.
Healthcare products maker Ebos is also on the calendar, while Precinct Properties NZ and Winton Land are also in the diary.
Across the Tasman, Woolworths, Nine Entertainment, and WiseTech Global are among the headliners for earnings in Australia. Futures are pointing to a 0.4% gain for the S&P/ASX 200 index when trading opens today.
No major local data are scheduled for today.
Reporting by Paul McBeth. Image from The Now Time on Unsplash.
