US President Donald Trump’s tariff exemption on smartphones, laptops, memory chips and other electronics will put local components-maker Rakon in focus when New Zealand’s stock market kicks off the new week.
But any relief might be short-lived given US commerce secretary Howard Lutnick’s comments that the carved-out products will face separate duties alongside semiconductors once an investigation has been completed in the next two months.
NZX-listed components maker Rakon has said about 15%-to-20% of its revenue is derived from direct US sales, and the bulk of its products are manufactured in New Zealand. Its shares have dropped 7.6% to 49 cents so far in April, its lowest level since December 2020.
The ratcheting up of tariffs on Chinese products has weighed on the likes of Apple and HP, which manufacture electronics outside the US, and both firms suspended shipments from inland China to the US before Trump’s exemption.
The shift was the latest in the moving tariff feast, which saw a 90-day pause on the wide-ranging regime as stock markets were whipped back and forth and US government bond yields steadily climbed.
Lull in the storm
Stocks on Wall Street gained on Friday, before the latest announcement, with the S&P 500 up 1.8%, while European markets were mixed as Germany’s DAX 40 fell 0.9% and the UK’s FTSE 100 advanced 0.6%.
“The US dollar fell to a three-year low and treasury yields moved higher amid continued elevated volatility across global financial markets,” Bank of New Zealand senior interest rate strategist Stuart Ritson said in a note. “Equities recovered from an earlier drop in the Asian time zone, and the S&P closed 1.8% higher, after a week of extraordinarily large price swings.”
The kiwi dollar climbed to 58.30 US cents at 7am in Auckland from 57.64 cents on Friday. It sank to 92.68 Australian cents from 93.10 cents last week.
Futures markets open at the same time as New Zealand’s NZX, while Australian futures are pointing to a 0.2% increase for the S&P/ASX 200 index.
US company earnings are in focus this week with Goldman Sachs, Bank of America and Netflix among those reporting in the shortened trading week – Good Friday is a holiday.
Domestic December quarter inflation is the headline piece of economic data this week when Statistics New Zealand publishes it on Thursday.
Local data today include February travel and migration figures, March consumer spending on credit and debit cards, and the BNZ-Business NZ services activity gauge.
Reporting by Paul McBeth. Image from ThisisEngineering on Unsplash.
Disclosure: Paul McBeth has owned shares of Rakon since January 2024.
