NEW ZEALAND BUSINESS NEWS
Empowering Kiwi Businesses
Brent crude has climbed back above US$117 a barrel, matching the six-month peak reached at the end of last week. The move reflects ongoing tensions between Washington and Tehran, with reports that the United States is weighing new strikes. Both a negotiated settlement and further military action are being signalled as live options by the US administration.
Iran has threatened an attack, and reports indicate Tehran is preparing retaliatory action against targets that include Israel and the United Arab Emirates. For New Zealand businesses, the practical channel is fuel and freight costs, which feed through to margins well before they show up in headline inflation.
Despite the oil backdrop, investor sentiment has improved. US share markets posted solid gains led by technology stocks, as attention turns to this week’s Federal Open Market Committee meeting and earnings from Alphabet, Microsoft, and Amazon. Investors are focused on AI spending and whether it is translating into profit.
Anthropic, the maker of the Claude artificial intelligence system, is proceeding with a large initial public offering that could land ahead of US Thanksgiving. The listing would be one of the year’s most closely watched market events for the technology sector.
The US dollar firmed broadly as risk appetite returned, with the yen and Swiss franc among the weakest major currencies. The Canadian dollar and Norwegian krone, both tied to energy exports, were little changed against the greenback and outperformed most peers as oil pushed back toward its recent peak. The New Zealand dollar slipped back from above 0.5700, a modest move.
Treasuries showed limited movement without significant economic data and barely reacted to the rise in crude. The 10-year US yield held at 4.98% as the market consolidated a recent rally, while shorter-dated bonds underperformed slightly and narrowed the gap between two-year and 10-year yields to +28 basis points.
Market pricing for this week’s Fed meeting was largely unchanged, implying a negligible 10% chance of a 25-basis-point increase. The Fed, European Central Bank, Bank of Japan, and Bank of Canada are all expected to hold rates, putting the emphasis on accompanying commentary.
Gold edged back above US$4,000 an ounce after a sharp fall last week. That level has supported prices several times since mid-year. Holdings in gold exchange-traded funds have expanded steadily since mid-July to a multi-year high even as the metal’s price retreated, a build-up that could weigh on the market if those positions are sold.
Germany’s business outlook improved unexpectedly for a sixth month in a row, adding to evidence that Europe’s largest economy is emerging from a long downturn. The Ifo expectations index rose to 91.6 in October from 90.4 in September. The gain follows mixed purchasing managers’ index readings last week, with manufacturing stronger than expected and services weaker, leaving the overall result short of forecasts. German government bonds closed at higher yields with the curve flattening.
French 10-year yields fell 11 basis points to 4.90% after Moody’s affirmed the country’s Aa3 rating with a negative outlook. The agency is assuming a deficit-reducing 2027 budget will ultimately be adopted despite a difficult political and social backdrop. The spread between French and German 10-year bonds narrowed to 156 basis points, its narrowest level since the euro area sovereign debt crisis.
The Reserve Bank’s policy review is the key domestic event this week, with a 25 basis point increase widely expected. New Zealand two-year swap rates closed at 4.05% on Friday after falling 2 basis points, having earlier bounced off the bottom of their trading range near 4.0%. Ten-year rates closed 6 basis points lower at 4.62%, and the gap between the two maturities flattened to a fresh cycle low of +55 basis points during the session before a modest rebound.
Australian 10-year bond futures were little changed from the New Zealand close, pointing to limited direction for local rates at the open. No domestic data is scheduled, and offshore releases are largely second-tier. Later in the week, third-quarter gross domestic product figures for the US and the euro area are due, alongside US and Australian inflation data that will be closely watched.
NZ Business News reports on the decisions, deals and numbers shaping New Zealand business — the companies making them, the policy and market conditions they work within, and what it means for the people running businesses here.