One of the three major US indices managed a positive trading session, while the other two ticked lower, dragged by certain mega cap names. Europe saw green as ECB rate cut optimism motivated strong trading. Australasia was mostly in the red, while Australia and Korea stayed dry.
Rising 10-year bond yield weighs on equities
Tech stocks and megacaps slipped on a rising US 10-year bond yield, while the DOW climbed +0.4%. The aforementioned 10-year treasury bond yield gained +3 bps to 4.49%, while the 2-year added +2 bps to 4.84%. The S&P 500 (-0.1%) and the NASDAQ (-0.2%) both failed to stay dry. The latter aggravated by an -8.7% drop in Uber, after it posted a 1Q loss and downbeat forecast. Tesla added fuel to the fire, falling -1.9% after Reuters issued a report that US prosecutors were investigating possible fraud by misleading investors and consumers. Intel fell -2.7% after it warned of a sales reduction due to a loss of export license for China.
Europe ends on a positive note as investors continue to bet on a rate cut in the near future
Rate cuts were still the talk of the town as Europe ended on a higher note on Wednesday. In data, German stat agency Destatis released a report showing Germany’s industrial production fell in March on weak output. The pan-European STOXX 600 climbed +0.3%, while London’s FTSE100 gained +0.5%. Informa added +2.0% after it raised its share buyback target by 50%. AstraZeneca has decided to pull its COVID-19 vaccine Vaxzevria due to weak demand and a highly competitive space, the stock gained +1.2%. Siemens Energy soared +12.5% after a strong quarterly result and a guidance upgrade. Puma skyrocketed +11.0% with 1Q sales in-line with expectations.
Asian indices mostly underwater, Australia up while the Kiwis are down
Korea’s Kospi (+0.4%) was Asia’s only index in the green as all others fell. Japan's Nikkei 225 steep -1.6% decline led losses, followed closely by Hong Kong’s Hang Seng (-0.9%), and China’s CSI 300 (-0.8%) and Shanghai Composite (-0.6%). The ASX 200 advanced to a four-week high after it added +0.1% yesterday. Perpetual fell -7.1% following its confirmed sale of its corporate and wealth management businesses to KKR for A$2.18b. On the other hand, Pinnacle Investments increased +6.7% to AU$12.61 after an announcement that funds under management grew +6% in the March quarter. Goodman Group slipped -0.3% despite upgraded guidance. Qantas increased +0.8% after its CEO highlighted improved performance, especially in the first, business, and premium-economy classes. The NZX 50 fell -0.2%.
WTI Crude and Iron Ore up, Gold down
WTI Crude gained +0.9% to US$79.06/bbl, Iron Ore added +1.8% to US$118.69/MT, Gold fell -0.1% to US$2,311.96/oz.
NZ Headlines
Offshoring of jobs to cut costs at ANZ NZ has accelerated in the last year, including a large number of highly-skilled IT roles that have been sent overseas. It is understood some 100 jobs from the company’s wider data/IT team have been cut recently, with many of them moved to India.
M&A deals are taking longer to complete as companies grapple with forecasting in an uncertain environment, although international investors and private equity firms are still hunting for opportunities in New Zealand following a difficult 2023, PwC partner Regan Hoult says.
Funding for New Zealand start ups dropped -12% in 2023 to $163m, compared to $182m the prior year, according to the latest Young Company Finance deal data. The drop off follows international trends and is mainly blamed on the high interest rate and inflation environment which has changed the opportunity cost for investors towards lower-risk options such as government bonds.
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