Cautious tone on financial markets
Markets continue to trade with a cautious tone, with Israel vowing to retaliate against Iran’s weekend attack, notes BNZ Markets this morning. US equities are down close to 1% and oil prices are barely lower, with Brent crude about US$90. US Treasury yields rose to fresh 2024 highs, with much stronger than expected US retail sales being a factor. “The USD has been well supported, with the yen, NZD and AUD notable underperformers, weakening to fresh lows,” says Jason Wong, senior markets...
Commodity currencies remain firm
9.4.24 Market movements have been well contained to kick off the week without any key catalysts to perturb pricing, says BNZ Markets this morning. Jason Wong, senior markets strategist, notes “There was a total eclipse of the sun in the US and a total eclipse of the year-to-date highs for US rates overnight, before they settled back down, seeing the 10-year Treasury yield little changed from the NZ close.” US equities are slightly higher and the USD is slightly weaker. “The NZD and AUD have...
Mixed situation for NZ commodities
5.4.24 The ANZ World Commodity Price Index fell 1.3% m/m in March as dairy and forestry prices fell, comments Susan KIlsby, senior agri economist at ANZ. In New Zealand dollar terms, the index fell 0.4% m/m as the NZD lost 0.8% against the Trade Weighted Index. Global shipping prices have eased slightly but still remain relatively high due to ongoing congestion in global shipping channels, says Ms Kilsby. “The Baltic Dry Index, which tends to be particularly volatile, eased 10% in March, but...
Dairy auction prices retreat
7.3.24 Dairy prices pulled back slightly at this week’s Dairy Trade auction. Overall prices were down 2.3% and the key whole milk powder (WMP) prices fell 2.8%. “This auction was weaker than recent auctions but more in line with recent weaker futures market trends and particularly the outcome of the GDT Pulse auction held on February 27, “ commented Kelly Eckhold, Westpac NZ’s chief economist. Most products posted price falls although cheese prices continued recent volatility, rising...
Commodity markets remain fragile
7.3.24 The ANZ World Commodity Price Index gained 3.5% m/m in February as both dairy and meat prices improved. In New Zealand dollar terms, the index lifted 4.1% m/m as the NZ dollar fell 0.8% against the US dollar. ANZ agri economist Susan Kilsby commented that “Global shipping prices are generally trending higher as problems traversing the Suez and Panama Canals are making journeys longer and more expensive. “New Zealand’s smaller exporters are more exposed to the recent changes in...
Gold price hits new high
7.3.24 The market value of gold rallied to a record level this week, after markets reacted to the weaker US dollar emanating from the belief US interest rates are stable for now and likely to fall later in the year. Reuters reported gold was building on the “stellar momentum driven mostly by bets for U.S. monetary easing.” Spot gold gained 0.8% to US$2,145.09 (~NZ$3,516) per ounce in midweek after reaching a record high of US$2,152.09 (NZ$3,527) earlier. The rare metal palladium, used in the...
Positive dairy auction trend continues
21.2.24 The latest GDT dairy auction held in midweek showed the positive trend continuing with an overall gain of 0.5% in the price index. This was the smallest increase this year and the results were mixed. Whole milk powder falling 1.8% and skim milk power up 1.3%. Butter was barely higher while cheddar fell 7.6% and anhydrous milk fat up 8.6%. This week’s outcome was broadly in line with expectations. Westpac had forecast a 1% fall in whole milk powder prices which was in line with...
Kiwi dollar edging higher
Currency movements have been modest, with the NZD’s 0.3% gain to 0.6145 from last week’s close making it the top performer, notes BNZ Markets this morning. With the US public holiday there has been little newsflow. Future markets for Treasuries and equities show small changes, says Jason Wong, senior markets strategist. It's usually a struggle to get the word count up following generally quiet Monday trading conditions, more so today with the US on holiday. US cash markets are closed, while...
Markets await torrent of data
Markets are in a holding pattern ahead of an eventful week, says BNZ Markets this morning. The week includes policy meetings from the US Fed and BoE, key global economic releases, earnings reports from some of the US market’s magnificent seven, and the US Treasury’s quarterly refunding announcement. “On paper, the calendar doesn’t come any more eventful than this,” says Jason Wong, senior markets strategist at BNZ Markets. “With all that to look forward to, the market has started the week on a...
NZD steady on currency market
19.1.23 Currency movements have been modest, with the NZD languishing around the 0.61 mark and down on most crosses, notes BNZ Markets this morning. The US-year rate has pushed up to a fresh high for the year of 4.15% following a surprising fall in jobless claims data, says Jason Wong, senior markets strategist. Equity markets are up despite the higher rates backdrop. The US 10-year rate rose to its highest level this year of 4.15%, up 6bps from the NZ close, after a surprising fall in...
Firmer dairy prices in first auction of 2024
17.1.24 Dairy auction prices posted solid gains in the mid-January DairyTrade auction which will brighten the start to the New Year for dairy farmers. Overall prices were up 2.3%, while key whole milk powder (WMP) prices lifted 1.7%. Westpac chief economist Kelly Eckhold says, “The result was again broad based and followed on from a similarly strong initial auction for 2024 in the first week of January. “All products posted price rises. Butter and anhydrous milk fat prices led the way,...
Stability on currency markets
15.1.24 Softer than expected US producer prices contributed to lower treasury yields on Friday night and currency markets were stable, notes BNZ Markets this morning. The US Dollar dipped briefly following the PPI data but was broadly unchanged into the end of last week continuing the range-bound price action since the recovery from 5-month lows at the start of January, says senior interest rate strategist Stuart Ritson. Lower front-end treasury yields didn’t have a lasting impact for...
Modest currency moves – oil drops
Another day, another extension of the global bond market rally, this time driven by weaker oil prices and a soft US ADP employment report being a supporting factor, says BNZ Markets this morning. European 10-year rates are down to their lowest levels since May, while the US 10-year rate has traded as low as 4.1%. “Currency moves have been small, with the NZD hovering around 0.6150,” notes Jason Wong, senior markets strategist. “Oil prices continue their poor run and are down more than 3% to a...
NZ dollar goes back upstairs
4.12.23 The US dollar moved higher initially on Friday night and remained near the highs until a speech by US Federal reserve chairman Jerome Powell’s, notes BNZ Markets this morning. The dollar index then reversed swiftly in line with lower treasury yields. The euro was a notable underperformer within G10 currencies as was the Canadian dollar. NZD/USD traded above 0.6200 to the highest level in 4-months and NZD/EUR is back at 0.5700. “Lower US yields have contributed to a fall in USD/JPY...
NZ dollar steadily rises
27.11.23 It was a subdued end to the trading week across global markets in the absence of first-tier economic releases and with a holiday-shortened session for US markets, notes BNZ Markets this morning. The S&P was near unchanged, and closed 1% higher on the week, which was the fourth straight weekly advance. “The US Dollar extended recent declines, global bond yields moved higher and oil prices fell after OPEC+ delayed a scheduled meeting amid a dispute about output quotas,” says Stuart...
Asian currencies to the fore
The US dollar has extended its recent decline. “It has been under pressure amid softer than expected inflation and activity data which has reinforced investors' expectations that the Fed tightening cycle is complete.” Notes Stuart Riston at BNZ Market. The dollar index fell a further 0.4%. “Asian currencies have performed strongly. USD/JPY couldn’t regain the psychological 150 level in Asian trade yesterday before trading 0.8% lower. Large speculative short Yen positioning could exacerbate any...
Oil prices on backburner
Newsflow remains light with modest changes in pricing across equities, bonds and currencies, as the market shows signs of consolidation following last week’s significant moves, says BNZ Markets this morning. The key market mover has been lower oil prices, with Brent crude down 2½% for the day after yesterday’s 4.2% drop, seeing it trade below USD80 per barrel for the first time since July.,” notes Jason Wong., senior markets strategist. “When prices were above USD90 the narrative was very...
Greenback in broad-based gains
8.11.23 The US Dollar has made broad-based gains while global bonds are lower in yield, says BNZ Markets this morning In commodity markets, oil prices have fallen close to 3%, to the lowest level in more than 3 months, on concerns about global growth following weak Chinese trade data, notes Stuart Ritson, senior fixed interest strategist. “Comments by US Federal Reserve officials emphasised that bringing inflation lower to 2% is its primary goal. However, Chicago Fed President Austan Goolsbee...
Fresh lift for commodity values
Strong rise for kiwifruit prices - pictured Kiwifruit Gold 6.11.23 The ANZ World Commodity Price Index gained 2.9% in October after also lifting the previous month. In local currency terms, the index rose 3.1% m/m. “Strong increases were recorded for dairy and horticulture, which helped to offset weaker prices for lamb and logs”, says ANZ Bank Agri Economist Susan Kilsby. Global shipping prices fell during October. Demand for shipping services remains slightly subdued. The volume of product...
Shift into safe haven assets
Rising investor risk aversion impacted global markets into the end of last week; global equities fell and flows into safe haven assets picked up, notes BNZ Markets this morning. In commodity markets, both oil and gold surged higher. Brent crude prices increased above $90 a barrel, a daily gain of more than 5%. US consumer sentiment fell to the lowest level since May reflecting higher gas prices and lower equities. Long term inflation expectations picked up relative to September but remain...
Market calmly weighing geopolitical risk
The market is currently taking a sanguine view of the war underway between Israel and Hamas, with oil trading sideways, sustaining the near-4% gain yesterday, equities gaining ground and no evidence of a safe-haven bid in currencies, notes BNZ Markets this morning. “Dominating the market’s focus is the seemingly coordinated message from Fed officials that the recent tightening in financial conditions is doing some of the work to support a weaker inflation trajectory, and is something the Fed...
Commodities index turns upwards
5.10.23 The ANZ World Commodity Price Index gained 1.3% in September after trending lower for the previous three months. “The lift, although modest, was broad based with all major sectors, except horticulture, lifting, said Agri Economist Susan Kilsby. In local currency terms, the index rose 2.0% m/m as the NZD depreciated 0.1% against the Trade Weighted Index. Global shipping prices were mixed during September. The Baltic Dry Index, which tends to be the most volatile of the shipping indices,...
Dairy prices up at auction
4.10.23 This week’s GDT dairy auction was another strong event, as anticipated by the futures market. The price index rose by 4.4%, following gains of 4.6% and 2.7% at the prior two events, with whole milk powder prices up 4.8% and skim milk powder up 6.6%. “Concern around milk supply might be entering more minds as early season NZ milk production has struggled and weather forecasters’ recent declaration of an El Nino weather pattern commands caution on the outlook through spring and summer,”...
Oil prices spike higher
10.8.23 The spotlight is on oil prices with UK’s Brent crude reaching nearly $88 a barrel, which, according to BNZ Markets, is the highest level since January and up close to 20% since the end of June on tightening supply from major producers. In New Zealand unleaded 91 octane petrol this week is averaging $2,775/litre (up 13.41c, or +5.07%, over the last 28 days) and diesel $2.088/litre (up 20.07c, +10.64%), partly driven by the removal of Auckland fuel subsidies. The Wall Street Journal...
Deflationary tone in China
Global equity indices were mixed overnight as markets look ahead to key US inflation data this evening, says BNZ Markets this mornng European stocks gained and Italian banks recovered some of the big falls from Tuesday after the Government partially backtracked on plans for a windfall tax, notes Stuart Ritson , senior interest rate strategist. US equities are marginally lower with the S&P down 0.2%, US treasury yields little changed and the US Dollar is broadly stable. Commodity prices...
Japanese smoothing bond yields
1.8.23 US equities were little changed to start the week with the S&P remaining close to 16-month highs having risen 3% in July, notes BNZ Markets. 10-year treasuries are trading near 3.95% and the US dollar is mixed. Oil prices extended recent gains with Brent prices up nearly 15% in July amid signs the market is tightening as OPEC+ cuts back production, says Stuart Ritson, senior rates strategist. Chinese equities advanced with officials announcing more measures to support the...
US dollar sustains strength
21.7.23 The USD is broadly stronger, while a strong Australian employment report yesterday sees the AUD higher than this time yesterday despite overnight weakness, notes BNZ Markets. Risk sentiment is weaker after some key earnings misses and US labour market data remaining too strong for comfort. The US Treasuries curve is higher and steeper, with the 10-year rate up 10bps, and US equities are weaker. :US labour market data remain too strong for comfort, reinforcing market expectations for...
Wheat prices spike overnight
20/7/23 CBOT (Chicago Board of Trade) wheat prices soared eight per cent overnight, after Ukrainian ports were hit by Russian missiles and Russia’s Ministry of Defence warned that all vessels travelling to Ukraine’s Black Sea ports will be considered as potential carriers of military cargo. This was the highest trading level of CBOT wheat since a spike in mid-June and previously in February this year, Rabobank senior grains analyst Dennis Voznesenski said. “As of this morning New...
Kiwi dollar firms on USD weakness
Markets have been quiet overnight with the US on holiday. The US cash market is closed and S&P500 futures are flat, notes BNZ Markets. Treasury futures are little changed from the NZ close. In light trading volumes the Euro Stoxx 600 was barely higher. European 10-year rate rates are up 1-2bps, the UK 10-year rate is down 2bps. “There has been a bit more price action in other markets,” says senior markets straregist Jason Wong. “Oil prices are up 2%, with Brent crude above USD76 per...
Equities incur a pullback
26.6.23 Global equity markets fell on Friday contributing to the largest weekly pullback since the US regional banking crisis began in March amid concerns about the growth outlook, notes BNZ Markets this morning. The S&P lost 0.8% resulting in a weekly pullback of nearly 2%, says Stuart Ritson. Surveys of purchasing managers (PMIs) pointed towards slowing activity particularly in Europe. The US Dollar made broad based gains amid the weaker risk sentiment while bond yields fell. Rising...
