Willis prepares to reveal budget; cheaper oil buoys Wall St

New Zealand’s finance minister Nicola Willis will deliver her third budget today in what’s expected to be a fiscally restrained affair as the coalition government spruiks its credentials in trying to return the books to surplus.

That comes as oil prices eased amid mixed signals on the Middle East conflict as Iranian state media reported a draft deal would restore shipping through the Strait of Hormuz within a month, while US President Donald Trump complained that he wasn’t satisfied with how negotiations are progressing.

Meanwhile, the kiwi dollar extended its gains after the Reserve Bank projected at least two rate hikes this year after keeping the official cash rate on hold yesterday in a split decision where governor Anna Breman’s casting vote broke the monetary policy committee’s deadlock.

And Mainfreight’s annual report will provide an insight into the impact of the energy shock on logistics firms, while software firm Black Pearl Group is also scheduled to announce its earnings and would-be miner Rua Gold is holding its annual meeting in Canada today.

The big reveal

Finance minister Willis will front the government’s budget today, having signalled a smaller operating allowance for new spending and the reprioritisation of $600 million a year as core public service roles are reduced, with the money earmarked for frontline health, education, defence and police support.

“Given the government’s repeated commitment to future fiscal balance, we see it likely that the projections for the underlying operating balance are similar to that presented at the half year fiscal update back in December,” Bank of New Zealand senior markets strategist Jason Wong said in a note. “The borrowing programme could be similar or slightly higher, given indications of increased capital expenditure.”

The fiscal outlook follows the Reserve Bank’s latest monetary policy decision, with governor Breman’s casting vote the deciding factor in keeping the official cash rate at 2.25%, with the committee united in expecting to hike rates later this year.

The kiwi dollar climbed to 58.97 US cents at 7am in Auckland from 58.76 cents yesterday, and jumped to 82.60 Australian cents from 82.06 cents as inflation data across the Tasman cooled expectations for more aggressive rate hikes by the Reserve Bank of Australia.

The Middle East conflict and ensuing energy shock elevated the uncertainty in forecasts for both the Reserve Bank and the Treasury – which had to revisit its work late in the budget process – and hopes for a lasting peace got mixed signals overnight as Iranian state media reported details of a proposed deal, while US President Trump said he wasn’t satisfied with negotiations and that the reported details were made up.

Mixed messaging

Brent crude oil futures fell 4.2% to US$92.57 a barrel at 7am, while the Polymarket prediction market priced in a 15% chance of a permanent deal being reached in the final days of the month, and a 48% chance by the end of June.

Stocks on Wall Street nudged higher, with the Dow up 0.5% as Procter & Gamble, Boeing and Home Depot leading the blue chip board higher. Tech stocks were more subdued after their recent rally, with the Nasdaq Composite and S&P 500 up 0.1%.

Greg Boland, market strategy consultant at Moomoo, said New Zealand’s NZX would probably start the day on firmer footing on the weaker oil prices.

“Markets now shift focus toward New Zealand’s budget 2026 announcement this afternoon alongside key US data releases and earnings from Salesforce and Marvell Technology after the closing bell with Dell Technologies reporting post-market tomorrow,” Boland said in a note.

Australian futures are pointing to a 0.5% decline for S&P/ASX 200 index when trading opens across the Tasman.

Local data today include Statistics New Zealand’s monthly filled jobs report.

Meanwhile, Mainfreight is due to report its annual result today, with Forsyth Barr analysts predicting a third year of earnings decline. Black Pearl is also due to report its annual earnings today, with its shares jumping 14% to a three-week high in trading yesterday and Rua Gold is holding its annual meeting in Canada today.

And Genesis Energy will be in view after Craigs Investment Partners analysts raised their rating on the electricity generator-retailer to ‘overweight’, saying it joins Mercury NZ as their preferred local power companies.

Reporting by Paul McBeth. Image from Curious News.