A strong housing market added to the uncertain inflationary outlook as US markets saw the major benchmarks stay relatively flat. Both Europe and Australia saw positive movement as company earnings sentiment appeared strong, while our friends across the ditch at the Reserve Bank of Australia kept its policy rate on hold.
Little movement in US indices as market seems uncertain on inflation
Major US indices saw very little movement as major benchmarks struggled to move either side of zero. The DOW was flat, the S&P 500 +0.1%, and the NASDAQ fell -0.1%. Market sentiment aligns with a need for the Federal Reserve to potentially hold the benchmark rate for an extended period as a persistently strong housing market continues to defy traditional notions about rising rates. In equities, Walt Disney fell -9.5%, its largest drop in nearly 18 months, as weaker TV business and box office performance saw profits drop. Nvidia also dropped -2.2% after news circulated that major customer Apple (+0.4%) is beginning to develop in-house chips to support its artificial intelligence software. Tesla fell -3.6% after China-made EV sales dropped in April. In bonds, the US 2-year treasury bond yield remained unchanged at 4.83% while the 10-year yield dipped -3 bps to 4.46%.
Positive sentiment out of Europe as indices added
European markets saw positive activity as both the STOXX 600 (+1.1%) and the FTSE 100 (+1.2%) jumped. UniCredit SpA, Italy’s second-largest lender, jumped +3.5% after smashing both revenue and net profit expectations with Q1 results. In the Swiss market, UBS added a major +8.0% after profit was reported following two consecutive quarters of loss. Software giant and Manchester United kit sponsor TeamViewer dropped -8.1% after failing to hit analyst earnings forecasts.
Major focus on the Australian financial sector as the RBA holds
Across Asia, Japan’s Nikkei 225 jumped +1.6%, along with Korea’s Kospi index (+2.2%), whilst Hong Kong’s Hang Seng dropped -0.5%. China remained largely unchanged as the Shanghai Composite inched up +0.2% and the CSI 300 was unchanged. In Australia the ASX 200 gained +1.4%. Most notably, the Reserve Bank of Australia left the OCR unchanged as inflationary pressures ease at a slower than preferred pace. Equity movement was dominated in the financial sector, with the big banks throwing their weight around. Westpac leapt +2.8% following positive results, while Macquarie and Commonwealth Bank added +2.5% and +2.1% respectively. ANZ remained nudged ahead at +0.1% despite unveiling a major buyback plan within its FH24 results. Due to trading ex-dividend, National Australia Bank dropped -1.5% as the only major bank to fall over the day. In New Zealand, the NZX 50 dipped -0.2%.
Oil flat, Gold down, Iron Ore up
Oil prices remained unchanged, while Gold dropped -0.4% and Iron Ore gained +0.7%.
NZ Headlines
The government’s books continue to show the tax take falling below expectations just weeks before the coalition government delivers its first Budget. In the nine months to the end of March, core tax revenue was $88.5b, compared with the forecast in December’s half-year Economic and Fiscal Update of $89.7b.
Auckland’s mayor Wayne Brown has confirmed the proposed sale of a long-term lease for the Port of Auckland is no longer being considered.
Two Degrees’ ‘free Aussie roaming‘ benefit for business mobile plan owners wasn’t all it was cracked up to be, according to the Commerce Commission. The regulator has filed eight charges under the Fair Trading Act against Two Degrees Mobile for alleged misleading claims about the terms of its free roaming marketing between 2020 and 2023, which created an impression that customers could roam year-round in Australia at no extra cost.
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