Wall Street slides as Brent nears US$100/bbl
Tainui rumoured to be making NRL franchise bid.
Wall Street returned from the long Labor Day weekend to a soft start to the week, as elevated oil prices fuelled fears the Federal Reserve will be forced to hike interest rates next week, with upcoming inflation data keeping investors on edge.
European markets were more muted having already borne the brunt of those heightened inflation fears, while Swiss drugmaker Novartis tumbled after a late-stage trial for an experimental drug came up short.
Chipmaker Qualcomm rallied after signing Amazon as a data centre chip customer, while artificial intelligence-linked firms such as AI cloud infrastructure firm CoreWeave continued to march higher on optimism about OpenAI’s latest model.
Meanwhile, Australian futures are pointing to a recovery when trading opens on the ASX today, with copper prices fuelling gains for mining stocks in the UK.
All about inflation
Stocks on Wall Street joined the general lethargy at the start of the week as the US returned from its long weekend, with the Dow Jones Industrial Average sliding 1.2% in late trading, while the S&P 500 fell 0.5% and the tech-heavy Nasdaq Composite was down a more modest 0.2%.
Brent crude oil futures rose as high as US$99.50 a barrel, and were up 1.4% at US$97.62 a barrel at 7am in Auckland as Iran-backed Houthi militants in Yemen attacked energy infrastructure in Saudi Arabia, raising fears about global fuel supplies.
That comes ahead of US inflation data, which were thrust into the spotlight last week when Fed governor Christopher Waller said the figures would be key in his decision-making on whether to support a hike when the central bank reviews policy next week.
“Continued attacks on energy infrastructure and uncertainty around shipping through the Strait of Hormuz are keeping the risk premium in oil prices elevated,” Moomoo market strategy consultant Greg Boland said in a note. “That matters because higher oil prices can feed directly into inflation expectations and make the Federal Reserve’s decision next week more difficult.”
The yield on US 10-year treasuries rose 3 basis points to 4.81%, widening the premium to New Zealand’s 4.77% equivalent note.
US Treasury secretary Scott Bessent told a Breitbart News event that his programme to expand government bond buybacks aimed to quell a fever in the bond market and return things to equilibrium, and played down suggestions that the decline in bond prices in recent weeks was due to fears about US debt.
Across the Atlantic, stock markets were more muted, with the UK’s FTSE 100 dipping 0.1% as mining stocks offset broader weakness, while Germany’s DAX was marginally higher and France’s CAC 40 nudged up 0.1%.
Risky business
Swiss drugmaker Novartis tumbled 11% after it said an experimental treatment for a muscle-wasting disorder failed in a late-stage trial. That came a day after an experimental cholesterol drug was also unsuccessful.
That flowed over to Wall Street, with biotech firm Amgen leading the Dow lower, sliding 9.2% in late trading, while Eli Lilly & Co declined 2.1%.
Qualcomm climbed 2.4% after signing Amazon as a data centre chip customer for as much as US$60 billion of product, while Intel advanced after a report from DigiTimes said the chipmaker was expected to raise prices, and OpenAI’s model continued to fuel demand for the likes of CoreWeave, Lumentum and Coherent.
The Financial Times reported that OpenAI and Anthropic’s bankers were lobbying credit rating agencies on behalf of the AI model developers for investment grade ratings once they go public, which would lower borrowing costs for their expansive AI infrastructure plans.
And fuel cell maker Bloom Energy surged 11% after it was tagged to join the S&P 500 later this month, while Nike dipped on its exit from the S&P 100.
Australian futures are pointing to a 0.3% gain for the S&P/ASX 200 index when trading opens across the Tasman today, while the kiwi dollar traded at 58.58 US cents at 7am from 58.59 cents yesterday.
The Australian reported that Tainui Group Holdings – the commercial arm of Waikato-Tainui – was a late entrant to vie for a National Rugby League franchise, which would be based in Hamilton, with the iwi’s financial heft an attractive sweetener for the sports administrator.
Meanwhile, The Australian’s DataRoom column reported HW Richardson Group and Waitomo Group were shaping up as the frontrunners for Mobil NZ’s petrol station network, with Channel Infrastructure in the mix for the terminal assets.
Moomoo’s Boland said New Zealand’s S&P/NZX 50 index was likely to start the trading day flat, with the mixed leads from Australian futures and Wall Street’s decline. New Zealand’s benchmark equity index has declined for the past two sessions.
Companies shedding rights to upcoming dividend payments will be another headwind on the NZX 50, with Summerset Group Holdings and Goodman NZ going ex-dividend.
No local data are scheduled for today.
