Mark Lister, investment director at Craigs Investment Partners, said the weekend news of more strikes in the Middle East created nervousness about whether the ceasefire would last and whether oil prices would spike.
“Pleasingly, that didn’t happen and gave investors some comfort. The US-Iran negotiations are still taking place, and the oil price, though up slightly, was still contained in the $US70s a barrel. And the stock futures were pointing to a positive night in the US,” Lister said.
Brent Crude oil was trading at $US$71.90 ($127.25) per barrel (6pm NZ time), down from US$97.81 this month.
In New Zealand, the average price of petrol has dropped under $3 for the first time in more than three months, with unleaded 91 reaching $2.99 a litre.
On Wall Street, trading was mixed at the weekend (NZ time) with the Dow Jones Industrial Average and S&P 500 steady at 51,876.11 and 7354.02 points respectively, while the Nasdaq Composite was down 0.24% to 25,297.62.
The week was characterised by the rotation out of technology stocks, with the S&P 500 down 2% and the Nasdaq falling 4.6%.
Nvidia and Alphabet lost more than 8% each; Meta Platforms, Apple and Amazon dropped more than 4% each, and SpaceX tumbled 17%.
Local stocks
At home, ASB Bank has lowered its inflation forecast to 4.1% for the second quarter ending June due to a fall in oil prices. The bank expects annual inflation to drop back to 2% by the middle of next year.
ASB said, “While this weekend’s developments (missile and drone attacks) show that some tensions remain, the baby steps towards resolving Middle East tensions have been encouraging, with oil prices falling back towards pre-war norms around three months earlier than we had assumed through March and May.
“Compared to May, the inflation risks have reduced considerably, and we now see less urgency for the Reserve Bank [RBNZ] to hike the Official Cash Rate (OCR).”
The RBNZ meets next Tuesday for its monetary policy review. And ASB believes the central bank will wait till September before commencing rate hikes.
However, ASB is still predicting three 25-basis-point increases in the OCR at the September, October, and November meetings. “We expect one last hike in early 2027, bringing the OCR to a peak of 3.25%.”
Fisher & Paykel Healthcare was up 76c or 1.98% to $39.21 on trade worth $19.36m, and Mainfreight increased $1.10 or 1.83% to $61.30.
Lister said the NZ dollar was close to US56c, its lowest level since November last year, which is beneficial for NZ businesses with international operations and exposure – Fisher & Paykel and Mainfreight are two of those stocks.
He said the NZ dollar had weakened because of the wide gap in the interest-rate differential between our OCR and those of our counterparts offshore. “Once the Reserve Bank starts increasing the OCR, we might see a recovery in the currency over the coming months.”
Infratil gained 12c to $15.32, and a2 Milk, increasing 26c or 2.96% to $9.05, also lent a helping hand in pushing the NZX 50 into positive territory.
Other gainers were Gentrack, up 6c to $3.82; Millennium & Copthorne Hotels NZ, up 17c or 5.35% to $3.35; and Vulcan Steel, up 21c or 3.44% to $6.31. Steel & Tube fell 1.5c or 4.29% to 33.5c.
Freightways was down 29c or 2.09% to $13.60; Channel Infrastructure declined 9c or 2.74% to $3.20; Briscoe Group eased 8c or 1.71% to $4.60, and Winton Land shed 3c or 2.03% to $1.45.
Ryman Healthcare was down 4c or 1.75% to $2.24; Scott Technology shed 5c or 1.9% to $2.58; Serko declined 4c or 2.68% to $1.45; Vista Group decreased 6c or $2.42; and Skellerup eased 11c to $6.52.
Other decliners were Goodman NZ, down 5c, or 2.4%, to $2.03; Allied Farmers, down 2c, or 3.08%, to 63c; and Move Logistics, down 1c, or 4.55%, to 21c. Kiwi Property was up 1.56c to 94.5c.