19 February 2025

Morning News Summary

Investors Flock to Asian Investments, US Flat

Investors eagerly await the RBNZ's OCR decision due today. Meanwhile in the US, Tuesday's markets were mixed as investors await the Fed's meeting minutes and key earnings reports to gauge consumer health. European equities hit record highs, buoyed by defense spending and banking stocks, while Australian equities declined after rate cuts. Asian markets saw a net inflow of foreign investments, benefiting Asian equities.

US equities mixed as investors await Fed minutes for developments ​​​​​​​

US markets were quiet on Tuesday, with minutes from the central bank’s January meeting due later today, which will give investors insight on tariff developments and indications of likely future interest rate movements. Investors also await retail giant, Walmart's, earnings, which are due later this week and should signal US consumer health. The DOW slid -0.2%, the S&P 500 was flat, while the NASDAQ boosted +0.2%. Speculations of a peace deal between Russia and Ukraine have arisen, following Russian and US officials meeting in Saudi Arabia. Meanwhile, Constellation Brands jumped +5.4% after Berkshire Hathaway announced investment in the alcoholic beverages producer. Intel advanced +6.6% after reports rivals, Taiwan Semiconductor Manufacturing Co and Broadcom were both considering potential deals for its sale. The two-year US Treasury bill climbed +3 bps to 4.29%, while the 10-year jumped +6 bps to 4.54%.

European equities hit record highs with defence spending and banking stocks up

European equities made gains on Tuesday, with London’s FTSE 100 staying flat while Europe’s Stoxx 600 boosted +0.3%, hitting record highs. European markets reacted positively to US earnings, the lack of trade tariffs and stronger European defence spending. In London, banking stocks leapt +1.5% keeping losses in check, as investors trimmed bets on Bank of England interest rate cuts after new data released revealed wage growth. InterContinental Hotels Group shed -4.5%, after revealing a US$900m share buyback plan, which fell short of estimates. Meanwhile, German arms manufacturer Rheinmetall and Thyssenkrupp soared a further +2.3% and +3.1% respectively, after European Commission President said the commission would propose exempting defence spending from EU government spending limits. 

Australian equities dip, Asian equities are boosted with international investors seeking investment diversification

The ASX 200 fell -0.7% after the Reserve Bank cut official interest rates for the first time in more than four years, reducing the target rate to 4.10% (from 4.35%). Oil titan, Woodside Energy, fell -1.5% after brokers cut their target prices after unexpected cost guidance changes were released. Meanwhile, Westpac tumbled -3%, taking its two session fall to almost -7%. In Asia, new data released shows a portfolio net inflow to emerging markets of $35.4b worth of foreign money in January, with Chinese equities seeing $2b worth of inflows. Most Asian indices gained. Hong Kong’s Hang Seng added +1.6%, while China’s Shanghai and CSI 300 both dove -0.9%. Meanwhile, Japan’s Nikkei 225 climbed +0.25 % lower, and Korea’s Kospi rose +0.6%. In New Zealand, the NZX 50 slid -0.1%.

WTI Crude and Iron Ore remain flat, while Gold gains ​​​​​​​

WTI Crude was flat at US$71.50/bbl, while Gold added +1.1% to US$2,930.56/oz, and Iron Ore was flat at US$106.83/MT. ​​​​​​​

NZ Headlines

Heartland dove -12% after the bank announced a $49.6m impairment expense for the six-months ended 31 December 2024 (up $23.4m on last years). Heartland cited poor economic conditions in New Zealand but expects the impairment expense will help it derisk and reposition.

Mining giant, BHP, cited falling commodity prices and Chinese economic slowdown as hurting profits. Sales of iron ore and coking coal have plummeted, while production levels are increasing. BHP has cut its dividend as revenues skidded -8%. ​​​​​​​

Today's Events

  • RBNZ: Monetary Policy and OCR announcement
  • StatsNZ: Business Price Indexes (Dec 24 qtr)
  • EBO 1H25 Result
  • FBU 1H25 Result
  • VNT FY24 Result