Wall St slides amid uncertain US, Iran peace talks

Stocks on Wall Street dipped as investors remain glued to whether the US and Iran will reach a lasting peace and reopen the Strait of Hormuz, with vice president JD Vance pausing a trip to Pakistan as the Islamic Republic were non-committal about resuming negotiations.

Defence stocks on both sides of the Atlantic were weaker after France’s Thales missed earnings expectations, while airlines were subdued as US President Donald Trump opposed a speculated merger between American Airlines and United Airlines, the latter of which will report after the bell.

Meanwhile, presumptive Federal Reserve chair Kevin Warsh talked up his plans to remain independent if his nomination is confirmed, telling senators America’s economic potential is growing while underlining the importance of keeping inflation in check.

That tone is set to flow through to the antipodes, with ASX futures indicating a soft start to the trading day across the Tasman, while milk prices fell for a second time at the latest Global Dairy Trade auction.

Uncertain times

Brent crude oil futures rose 3.1% to US$98.48 a barrel at 7am in Auckland, while the Polymarket prediction market was pricing in a 56% chance of a lasting peace between the US and Iran by the end of May as vice president Vance paused a planned trip to Pakistan to resume talks with Iran.

President Trump has said he doesn’t want to extend the ceasefire, saying the blockade of Iran will stay in full effect until negotiations were complete.

Stock markets on both sides of the Atlantic were weaker with the Dow Jones Industrial Average and S&P 500 both down 0.3% in late trading and the tech-heavy Nasdaq Composite dipping 0.2%. The volatility index, known as Wall Street’s fear gauge, climbed 5.9% to 19.98.

The UK’s FTSE 100 and France’s CAC 40 both dropped 1.1%, while Germany’s DAX declined 0.6%.

“Time is ticking as every week the Strait of Hormuz remains effectively closed, the global economic impact deepens,” Bank of New Zealand senior market strategist Jason Wong said in a note. “A speedy resolution needs to occur otherwise we’re in for a significant market correction, as investors are assuming a quick turnaround.”

Carriers were broadly weaker in the US and Europe, with Deutsche Lufthansa cancelling some routes and flights in response to rising jet fuel costs, while Alaska Airlines pulled its earnings guidance over the uncertain fuel costs.

Airline support

Meanwhile, Trump said he would oppose a rumoured merger of American Airlines and United Airlines – the latter of which is reporting after the close – and that he was open to government support for Spirit Aviation.

Air New Zealand was unchanged in trading on the NZX yesterday, while Qantas Airways and Virgin Australian both dipped on the ASX.

Defence stocks were broadly weaker after France’s Thales missed earnings expectations, weighing on the likes of US contractor Northrop Grumman – which reported a strong quarter – and the UK’s BAE Systems.

UnitedHealth Group posted biggest gain on the Dow, up 8% in late trading after reporting a better-than-expected March quarter.

Fed chair nominee Kevin Warsh made his case for confirmation at a Senate committee, telling policymakers Trump hasn’t asked him to commit to lower interest rates if he takes the seat.

That downbeat tone is set to carry through to the antipodes, with Australian futures pointing to a 1% slide for the S&P/ASX 200 index when trading opens across the Tasman. New Zealand’s S&P/NZX 50 index eked out a 0.1% gain in trading yesterday.

The kiwi dollar traded at 58.94 US cents at 7am in Auckland from 59.06 cents yesterday, and was almost unchanged at 82.40 Australian cents from 82.41 cents as economists increasingly expect an early rate hike by the Reserve Bank to keep a lid on inflation pressures.

No major local data are scheduled for today, while prices fell at the latest GDT auction, with the price index down 2.7% with an average winning price of US$4,143 a tonne. Whole milk powder prices dipped 0.6% to US$3,666 a tonne. The Fonterra Shareholders’ Fund and Synlait Milk both gained on the NZX yesterday.

Media company NZME holds its annual meeting in Auckland today, where Dunedin city councillor Benedict Ong has nominated himself as a director. The board recommended shareholders reject Ong’s nomination and the New Zealand Shareholders’ Association will vote against him.

Reporting by Paul McBeth. Image from Adam Michael Szuscik on Unsplash.