Shane Solly, portfolio manager at Harbour Asset Management, said the US announcement of the blockade caused oil prices to jump back up, and New Zealand bond yields also increased.<\/p>\n
\u201cTrump seems unconcerned about whether Iran returns to the table for the peace talks \u2013 and Asian markets came off the boil,\u201d he said.<\/p>\n
The NZ 10-Year Government Bond yield increased nearly 5 basis points to 4.768%.<\/p>\n
The oil price was back over US$100 (NZ$171.66) a barrel, with Brent Crude trading at US$102.2 at 6pm NZ time.<\/p>\n
At home, ANZ is predicting three 25-basis-point hikes in the Official Cash Rate (OCR) in July, September, and October, taking the rate to 3%.<\/p>\n
\u201cWe see the Reserve Bank becoming too uncomfortable with an OCR in stimulatory territory as inflation inevitably rises, concluding the risks of going too late outweigh the risks of hiking too soon \u2013 as long as the OCR is not considered contractionary,\u201d ANZ said.<\/p>\n
Solly said there had been discussion of pre-emptive OCR hikes to get to the neutral rate of 3% earlier, \u201cso you don\u2019t have to go harder later on.<\/p>\n
\u201dThe real economy may struggle to absorb the rate increases in combination with continuing fuel issues, and there is a risk of returning to a recession.\u201d<\/p>\n
ASB Bank is forecasting the first OCR increase in September, brought forward from December, with an end-point of 3.25% by mid-2027.<\/p>\n
Local stocks<\/p>\n
Infant milk supplier a2 Milk slumped $1.39 or 12.4% to $9.82 after downgrading its full-year earnings guidance<\/a> by more than 10% because of chain supply and production impacts.<\/p>\n The company told the market it was currently experiencing temporary in-market product availability, primarily relating to shortfalls of China-label infant formula at distributors and retailers.<\/p>\n Inventory levels have been low throughout the financial year, and there remains a significant backlog of unfilled purchase orders from Synlait with less capacity to catch up following the sale of its North Island plant.<\/p>\n A2 Milk expects lower China label formula sales and additional one-off supply chain costs in the second half, and is now forecasting low-to-mid double-digit revenue growth, down from previous guidance of mid-double-digit percentage growth.<\/p>\n Net profit is expected to be similar to last year\u2019s of $202.9m, and operating earnings margin is likely to be 14-14.5%, down from 15.5-16%.<\/p>\n Synalit, unchanged at 42c, said it continued to rebuild customer inventory following the previously reported manufacturing challenges, and production has recently returned to targeted levels.<\/p>\n Solly said it was a tough update by a2 Milk driven by supply chain disruption. \u201cDemand is still strong in China, but it\u2019s taking more time to get their product in there.<\/p>\n \u201cThe a2 Milk update is a reminder that we haven\u2019t seen downgrades from companies as a result of the Middle East conflict,\u201d he said.<\/p>\n Fonterra payout due<\/p>\n More than 9000 Fonterra Co-operative farmer\/shareholders will this week receive an average of $400,000 in cash from the $3.2 billion capital return following the sale of the Mainland Group to French dairy company Lactalis.<\/p>\n