Wall Street rallies into long weekend as Intel surges

New Zealand’s stock market is getting a mixed lead heading into the weekend, with Wall Street buoyed as US President Donald Trump said the administration will work with Apple and Intel to produce semiconductors domestically, while Australian futures are pointing to a soft start to the day across the Tasman.

SpaceX fell for a second day as the space and artificial intelligence conglomerate was said to be eyeing a US$20 billion bond offering, with fellow space stocks Rocket Lab and AST SpaceMobile also on the red side of the ledger.

Bitcoin extended its decline as Strategy’s recent selling and a decline in the firm’s preferred shares further cooled investors’ appetite for riskier assets in an environment where interest rates are expected to rise.

Statistics New Zealand’s monthly trade figures are due today, while a softer kiwi dollar will keep exporters such as Fisher & Paykel Healthcare in view.

Calmer times

Wall Street was stronger heading into the long weekend, with US markets closed on Friday for the Juneteenth holiday. The CBOE volatility index, known as Wall Street’s fear gauge, fell 8.9% to 16.80 as oil tankers started moving through the Strait of Hormuz after the US and Iran signed their interim deal to end their months-long conflict.

Brent crude oil futures were marginally weaker at US$79.52 a barrel at 7am in Auckland.

The tech-heavy Nasdaq Composite surged 1.5% in late trading, with chip companies and semiconductor firms rallying on news that the White House would work with Apple and Intel to develop domestic manufacturing capability. Intel jumped 11% in late trading, while Apple was up 0.4%.

Meanwhile, the Dow Jones Industrial Average was up a more modest 0.2%, with Caterpillar, Walt Disney Co and Nvidia atop the blue-chip index’s leaderboard, while the S&P 500 gained 1%.

SpaceX extended its decline, down 2.2% in late trading amid reports that its bankers were preparing meetings to sell US$20 billion of bonds to fund its AI ambitions. The shares were recently at US$187.675, still above its US$135 initial public offering price.

That spread to other space stocks, with AST SpaceMobile sliding 7.9% and local favourite Rocket Lab down 1.6% at US$106.26.

Cryptic interpretations

Bitcoin fell 2.5% to US$62,622 at 7am as crypto treasury firm Strategy’s preferred shares, known as Stretch, fell below their face value. The preferred shares were used to fund purchases of the crypto currency, with their decline making it unprofitable to do so.

European markets were broadly stronger, with Germany’s DAX and France’s CAC 40 both up 0.4%, while the UK’s FTSE 100 fell 1%, with the London Stock Exchange Group leading its own bourse lower, falling 7% after getting downgraded on fears AI would undermine its data business.

The Bank of England kept its key rate at 3.75%, with policymakers saying the US-Iran ceasefire cooled the threat of wider inflation, but hadn’t eliminated it completely.

Australian futures are pointing to a 0.5% decline for the S&P/ASX 200 index when trading opens across the Tasman, despite the stronger lead from Wall Street.

Meanwhile, the kiwi dollar fell to 57.54 US cents at 7am from 57.95 cents yesterday against a broadly stronger greenback after the Federal Reserve left the door open for higher rates at this week’s policy review.

“NZX expected to open mixed this morning, with positive leads from Wall Street's late rally offset by a weaker ASX 200 futures market,” Moomoo market strategy consultant Greg Boland said in a note. “Investors remain cautious after the Federal Reserve's hawkish tone and ongoing uncertainty around the timing of future interest rate moves.”

Local data today include Stats NZ’s monthly trade figures, while the Booster-managed Private Land and Property Fund sheds rights to a 0.7 cents per share dividend today.

Reporting by Paul McBeth. Image from Slejven Djurakovic on Unsplash.