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Focus falls on China

1.12.22 Optimism around an eventual shift away from the zero-Covid policy in China continues to gather momentum, says BNZ Markets. Bloomberg is reporting the health authorities are planning a fourth vaccine shot and state media appear to have subtlety shifted their messaging around Covid, says Nick Smyth. Market moves have been relatively contained over the past 24 hours as investors waited on Fed Chair Powell’s speech earlier this morning.  US equities are flat to slightly lower, US rates...

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Chinese currency pulls Kiwi up

30.11.22 Market sentiment has shown signs of rebounding over the past 24 hours as the Chinese authorities signalled steps to increase vaccination of the elderly, seen as another step towards the eventual abandonment of the zero-Covid policy next year, notes BNZ Markets. “The CNH is almost 1.5% stronger since this time yesterday, helping to lift the NZD back to 0.62, while the Hang Seng surged over 5%,” says Nick Smyth. “There hasn’t been much impact on broader markets however, with US equity...

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Market focus on protests in China

29.11.22 Risk appetite has turned more cautious to start the week, with investors focusing on the weekend protests in China against the Chinese government’s zero-Covid policy, notes BNZ Markets The market fallout from the protests has been reasonably contained so far, with the S&P500 off by around 1% and oil prices and US Treasury yields rebounding from their falls yesterday, says Nick Smyth “The NZD and AUD have weakened, in sympathy with a lower CNY, the NZD falling back below 0.62,...

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Markets watching China’s Covid surge

28.11.22 It was a relatively quiet end to the week for markets, with US trading activity unsurprisingly much lighter than usual given Thursday’s Thanksgiving holiday, notes BNZ Markets. Equity markets and currencies were little changed, the NZD ending the week at 0.6250. European bond rates were sharply higher as the market digested hawkish ECB comments, but the US 10-year rate was little moved, ending the week just under 3.70%. NZ rates consolidated on Friday, with market expectations for the...

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Higher risk appetite – Kiwi firm

24.11.22 Higher risk appetite has extended, with another positive session on Wall Street, lower global rates and a weaker US dollar, notes BNZ Markets. Data releases were mixed, with the market giving more weight to signs of US economic weakness than the positive surprises, comments Jason Wong, senior markets strategist. NZ rates rose sharply and the yield curve flattened significantly after the RBNZ delivered a record 75bps lift in the OCR to 4.25% and projected much higher rates to come,...

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NZ dollar higher ahead of OCR decision

It has been an uneventful trading session overnight, on low volumes, ahead of the US Thanksgiving holiday, notes BNZ Markets this morning. “Risk appetite is higher, with seemingly more weight put on the Fed dialling down its hawkish policy stance than the current COVID outbreak in China,” says senior markets strategist Jason Wong. “US equities are higher, US Treasury rates are lower, and the USD is broadly weaker. The market has positioned itself for a hawkish policy update from the RBNZ...

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China growth issues surface

22.11.22 Markets have traded with a more cautious tone to start the new week, with equity markets lower and the USD stronger, says Nick Smyth at BNZ Markets this ,morning. Oil prices have fallen on concerns around Chinese growth, as some cities reimpose Covid restrictions, and reports, since denied by Saudi Arabia, that OPEC+ will consider a production increase.  Global rates are slightly lower overnight and yield curves are again flatter, the US 2y10y curve pushing down to fresh 40-year lows...

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Kiwi dollar remains on higher level

Friday saw an uneventful end to the trading week, with a modest gain in US equities, says BNZ Markets this morning. Changes in currency markets were modest. US Treasury yields continued to push higher and with a flatter curve, taking the 2s10s spread to the most inverted in over forty years, notes senior markets strategist Jason Wong.. “The NZD closed up for the fifth consecutive week at around 0.6150, after taking another peek above 0.62 on Friday night. Oil fell and capped off a poor week,...

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Markets more cautious around inflation

17.11.22 After the burst of optimism over the past week, as investors digested the downside surprise to US inflation, markets have traded with a more cautious tone overnight, notes BNZ Markets. US equities are lower, giving back a little of their recent strong rally, while the US 10-year is down to 3.71%, its lowest level in six weeks. Currency moves have been more restrained, with the USD largely consolidating after its recent big move lower, says Nick Smyth.  The NZD is back to around...

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Wall Street shows some muscle power

12.11.22 // WARREN HEAD After a rather chaotic few weeks for global equity market, there was a scramble back into equities late this week. US investors turned a rather minor move lower in the rate of inflation into a sharemarket surge, a rout for the bond market bears and pounding for the US dollar. The October CPI came in at +0.4% and the annualised rate thus +7.7%. The expected CPI was 8%. The Wall Street barometer, the Dow Jones Industrial Average has reacted strongly with the biggest rally...

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New York surges on easier CPI

11.11.22 US investors grabbed hold of a miniscule fall in the rate of inflation and turned it in to a rout for the bears on Wall Street in a manic market shift overnight. The Wall Street barometer, the Dow Jones Industrial Average has reacted strongly with the biggest rally in 2 years. The latest CPI was fearfully awaited as a bellwether for further rate hikes by the US Fed and a potential tipping of the US economy ever closer to recession. That may still happen but for now the bears were...

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Stalemate looms in US elections

Risk appetite is weaker, with the Republican party doing worse than expected in the US mid-term elections and the results still up in the air, some contagion worries after the meltdown in cryptocurrencies, and nerves ahead of tonight’s key US CPI release, says BNZ Markets this morning The S&P500 is currently down about 1%, the USD is broadly stronger, with the NZD just under 0.59, and US Treasury yields are slightly lower, notes senior markets strategist Jason Wong. US mid-term election...

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Kiwi dollar on the rise

9.11.22 Risk appetite has continued to rebound overnight as investors await the results of the US midterm elections and the all-important US CPI data later this week, notes BNZ Markets. Global rates are lower, the US 10-year rate back to around 4.13%, helping to support a further lift in equities (S&P500 +1.3%) and a weaker USD. The NZD has pushed up to almost 0.60. “Yesterday saw a large jump in 2-year ahead NZ inflation expectations, solidifying expectations for a 75bps RBNZ rate hike...

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Pound falls, rates volatile

4.11.22 Market moves overnight have been dominated by the fallout from the Fed meeting, at which chairman Jerome Powell emphasised a higher-for-longer interest rate outlook. US rates have pushed higher, the USD has appreciated sharply, while equities have extended their post-Fed sell-off, says Nick Smyth at BNZ Markets. “The GBP is down almost 2% overnight amidst a stronger USD and after a dovish Bank of England meeting, at which Governor Bailey pushed back against market expectations for...

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Quarterly earnings bonanza by bp

1.11.22 BP the British oil and gas giant has found itself assailed for making bigger earnings whilst the UK drags into the start of a winter energy crisis. Bp announced further share buybacks as underlying earnings of more than US$8bn were reported for the third quarter. The Financial Times commented that this left the UK-listed energy major “on course for one of the most profitable years in the company’s history.” Underlying profits for the three-month period at $8.2bn, have more than doubled...

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Equities and rates rebound

31/10/22 Equity markets closed last week on a positive note, with a strong earnings report from Apple (a relief after recent disappointing results from other big tech firms) contributing to a 2.5% rally in the S&P500. Global rates rebounded to end the week, helped by much stronger-than-expected European country-level CPI data, a reminder that central banks still have work to do get inflation under control. The US 10-year rate ended the week back above 4% while German rates reversed their...

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MARKETWEEK: 29.10.22 October has been positive for equities

Wall Street has its best month since 1976 MARKETWEEK 29.10.22   Warren Head   October shaped up as one of the better months of the year for equity investors, as share prices and profit predictions improved, despite the expectation of further interest rate rises this year. Market heavyweight industrials and utilities have been towing the NZ market higher following many weeks of a dismal drift downwards. The influence of the still volatile US equity market has been profound but there...

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Euro the key mover on currency markets

28.10.22 The emergent market narrative around central banks having passed the point of ‘peak hawkishness’ has gained further momentum overnight, says BNZ Markets. The ECB raised rates 75bps, as expected, but markets interpreted the statement as suggesting the ECB is becoming more cautious about the need for further aggressive tightening, notes Nick Smyth. European bond rates have fallen sharply, spilling over into other bond markets, and driving the US 10-year rate back below 4%.  The EUR has...

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US company earnings lift market

US sharemarkets advanced on Tuesday with investors awaiting earnings from Microsoft and Alphabet. Economic data was softer, highlighting the impact of higher interest rates and adding to speculation of a winding back of the size of rate hikes, says CommSec. “Shares in companies reporting earnings were firmer with Coca Cola up 2.4% and General Motors up 3.6% while 3M rose 0.1%. Shares in Apple and Amazon rose ahead of earnings results later in the week. “So far, nearly three quarters of the 129...

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US investors sense less aggressive Fed

US sharemarkets advanced on Monday as shrinking US business activity lifted investor hopes of a less aggressive monetary policy approach by the US Federal Reserve, reported CommSec. “Shares of HCA Healthcare jumped 7% after reporting solid third quarter results on Friday. “But gains on the technology heavy Nasdaq index were capped as Tesla shares fell 1.5% after the electric vehicle maker cut the price of its Model 3 and Model Y cars in China. “Shares of some Chinese companies listed in the US...

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Glint of optimism on size of rate hikes

After a punishing past few months, the last two trading sessions on US markets have seen a burst of optimism, says Nick Smyth at BNZ Markets. This was spurred by an article by Wall Street Journal ‘Fed whisperer’ Nick Timiraos that the Federal Reserve might consider stepping down the pace of rate hikes in December. “The market has pared back Fed rate hike pricing, with the peak in the Fed funds rate now expected to be below 5%, triggering a big steepening in the US curve (the 10-year rate is...

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Risk appetite rebounds

The new week has begun with a rebound in risk appetite, buoyed by the U-turn in UK government policy and a strong earnings result from Bank of America, says BNZ Markets this morning. “Global equities show strong gains and the USD is under pressure, with GBP leading the gains and the NZD driving well up through 0.56,” says Jason Wong, senior markets strategist. “UK rates show some large falls across the curve, dragging other global rates lower. “New Chancellor of the Exchequer Hunt has wasted...

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MARKETWEEK: U-turns as the pressure remains relentless

15.10.22   Warren Head Keeping your eye on the ball this week would have required a kit-bag of superior skills as the play on the markets has switched backwards and forth with sustained volatility. Overnight, in a bid to save her government from further financial market turmoil in the face of a cost of living crisis, UK Prime Minister Liz Truss has summoned her Chancellor Kwasi Swarteng home from a US trip to fire him prior to doing a U-turn on corporation tax cuts. The London based...

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Whippy session for all markets

14.10.22 Markets had a whippy overnight trading session, driven by speculation of a UK policy U-turn on taxes and a hot US CPI report, says BNZ Markets. These factors have driven some remarkable market volatility overnight, says Jason Wong, senuior markets strategist. “UK rates have plunged and GBP has still been the best performer, highlighting how much bad news was priced into the currency. Fed rate hike expectations have ramped higher again and the US Treasuries curve has flattened. “US...

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Qantas confident of 2nd half profit

  13.10.22 Qantas (QAN) was the best performer today on the ASX 200 today its shares surging 8.7% higher on the group’s upbeat new guidance for the first half of FY23, QAN shares traded up to A$5.62. Strong travel demand is accelerating the Qantas Group’s recovery from the COVID crisis Based on forward bookings, current fuel prices and latest assumptions about the second quarter, the Group expects underlying profit before tax of between A$1.2 billion and A$1.3 billion for the first half...

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US market soft pre-CPI

13.10.22 US sharemarkets eased on Wednesday, with investors absorbing the latest economic news. The focus is now on the consumer price index data on Thursday. Shares in PepsiCo gained 4.2% after the soft-drinks maker raised its annual revenue and profit forecasts, notes CommSec. The Dow Jones index fell by 28 points or 0.1%. The S&P 500 index fell by 0.3%. And the Nasdaq index lost 9 points or 0.1%. “US long-term treasuries rose on Wednesday (yields lower) as traders absorbed the business...

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AGM season starts in Australia

   11.10.22 The August company profit reporting season might be in the rear-view mirror for Aussie investors but the AGM (Annual General Meeting) season kicks off this week. In fact, a dozen meetings are scheduled, with investor gatherings for blue-chip sharemarket heavyweights Commonwealth Bank, CSL and Telstra, notes Commonwealth Securities.     Between October 10 and November 30, 2022, around 290 Aussie-listed companies are scheduled to host AGMs, Extraordinary General Meetings and...

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Stronger US dollar on risk-off market

11.10.22 The new week has begun where last week left off, with higher global rates, weaker equity markets and a stronger USD, notes BNZ Markets. “Weaker risk sentiment hasn’t been helped by Russia’s bombardment of Ukrainian cities and the focus has returned to the UK, with its gilt market leading the global bond market sell-off, as the BoE’s gilt buying operation looks to end this week,” says Jason Wong, senior market strategist. The NZD and AUD have traded at fresh 2½-year lows. US public...

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Focus falls on US Jobs

10.10.22 The key focus for the market on Friday was the US employment report, notes BNZ Markets. “The unemployment rate fell 2 ticks to revisit its recent low of 3.5%, triggering higher US rates, a higher USD and weaker equities, consistent with the good news is bad news mantra, as data like that can only encourage the Fed to keep applying the brakes,” says Jason Wong, senior markets strategist “The NZD fell just below 0.56 and closed the week just over level, while the AUD traded at a fresh...

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USD and AUD slip and equities rally

5.10.22 Market moves in the first two days of October have been the mirror image of the previous month, says BNZ Markets this morning. Equity markets have rallied strongly again overnight, the S&P500 up more than 2% for the second day running, as markets start to toy with the idea of an earlier end to the global tightening cycle, says Jason Wong, senior markets analyst. “The USD has fallen sharply, down more than 1% against both the EUR and GBP, amidst the improvement in risk appetite....

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