“We thought and hoped we would be out of the woods with the US-Iran war, and instead the situation has reignited over there. Let’s hope it doesn’t escalate further.
“The Brent crude oil price is above US$90 ($154) and 20% higher than the end of last month. Fuel prices are approaching a zone that markets are uncomfortable with. And there’s still plenty of volatility globally in tech and chip stocks,” Lister said.
“It’s an important week for the US reporting season with 80 of the S&P 500 stocks reporting, including two of the Magnificent Seven, Alphabet Group and Tesla.
“The New Zealand market is still holding up okay compared with the weakness in international markets,” he said.
“It all comes down to what happens in the Middle East – whether oil heads to US$100, the Hormuz Strait is completely closed, or there’s a path to a diplomatic solution.”
Brent crude oil was trading at US$90.53 a barrel at 6pm NZ time.
In the US over the weekend, the Nasdaq Composite fell 1.4% to 25,520.24 points; the S&P 500 declined 1.01% to 7457.69 points; and the Dow Jones Industrial Average was down 0.776% to 52,146.42 points.
The Nasdaq sank 2.9% over the week, the S&P 500 dropped 1.6%, and the 30-stock Dow Jones was down 0.9%.
Lister said the release of the June Consumer Price Index (CPI) here will be closely watched. “Inflation will be higher than we would all like.
“It will be well above the Reserve Bank’s target band and point to further hikes in the official cash rate – this is also making investors uncomfortable. People will be looking under the hood at the components of the CPI.”
ASB said it was expecting annual inflation to jump to 4%, from 3.1% in the March quarter – “though this is lower than our earlier estimates”.
“The US and Iran relations have soured significantly, leaving a dreaded sense of deja vu. The memorandum of understanding is essentially void, with global oil prices on the up again.
“The risks of a more persistent inflation impulse are growing again,” ASB said.
Local stocks
There were very few major moves on the NZX. Fisher & Paykel Healthcare was down 23c to $39.70; Infratil decreased 18c to $15.14; Ebos Group shed 19c to $22.48; Gentrack declined 9c or 2.41% to $3.65; and Oceania Healthcare was down 2c or 2.65% to 73.5c.
Solution Dynamics fell 2.5c or 4.17% to 57.5c; Comvita was down 3c or 4.11% to 70c; Blackpearl Group fell 3c or 5.45% to 52c; and NZME shed 3c or 2.73% to $1.07.
Millennium & Copthorne Hotels NZ decreased 8c or 2.43% to $3.21; and Heartland Group was down 2c to $1.20. Heartland’s proposed merger with TSB Bank is facing public opposition in Taranaki.
Chorus was up 17c or 1.77% to $9.79; Auckland International Airport gained 11c to $8.61; a2 Milk increased 20c or 2.39% to $8.57; Spark collected 3.5c or 1.92% to $1.86; and SkyCity improved 2c or 3.51% to 59c.
Air NZ gained 1c or 2.41% to 42.5c, Ventia Services added 19c or 2.71% to $7.20; and PGG Wrightson increased 6c or 2.78% to $2.22.
Fletcher Building, unchanged at $3.75, announced the Government’s $60m grant to support the continued operations of Golden Bay Cement’s Northland operations near Whangārei.
Fletcher and Golden Bay have committed to continuing to produce cement at the plant until at least 2040 and to invest at least $150m over that period. Golden Bay operates New Zealand’s only domestic cement manufacturing facility and supplies nearly 60% of the cement used here.
Vital Healthcare Property Trust, up 1.5c to $1.90, told the market that it expects to report a net portfolio gain of $10m for the six months ending June, driven by rental increases and partly offset by a softening in the capitalisation rate.
Elsewhere in the property sector, Precinct increased 3c or 2.84% to $1.08; Stride was up 2c to $1.22; Kiwi gained 1.5c to 96.5c; and Investore was down 2c or 1.83% to $1.07.
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