Chinese policy decisions give mixed signals to markets overnight as the kiwi dollar rallied on optimism that the government will step up efforts to bolster growth, while a probe into chipmaker Nvidia cast a pall over Wall Street.
The kiwi rose to 58.75 US cents at 7am in Auckland from 58.11 cents at 5pm yesterday after China’s Politburo signalled stronger support in the coming year. Australian ASX futures are pointing to a stronger day across the Tasman, and domestic exporters to Asia’s biggest economy such as The a2 Milk Co will be in focus.
“While the announcement was short on specifics, it provided the market some hope that the government would be adding to stimulus measures to support the economy next year and counteracting impacts from Trump’s tariff policy,” Bank of New Zealand senior markets strategist Jason Wong said in a notice.
The prospect of extra stimulus provided support for US-listed Chinese companies such as Alibaba and Baidu, against a softer day on Wall Street, with the Dow Jones Industrial Average down 0.2% at 7am in Auckland and the tech-heavy Nasdaq down 0.5%.
Nvidia weighed heavily on Wall Street’s benchmarks, falling 2.1% to US$139.435, after China’s antitrust regulator, the State Administration for Market Regulation, said it was investigating whether the chipmaker breached the conditions of its 2020 approval to buy an Israeli networking firm.
The stoush is the latest ratcheting up of tensions between the US and China with US policymakers set to vote on a defence bill this week that includes funding for the removal of Chinese technology from American wireless networks, in the wake of stricter export controls being imposed on selling advanced technology to the Asian nation.
Meanwhile, deals continued to emerge as the end of the year draws near, with Bloomberg reporting that Cadbury-parent Mondelez was interested in buying chocolate maker Hershey, something that could flow through to the likes of dairy exporter Fonterra.
Advertising giants Omnicom Group and Interpublic Group confirmed reports that they plan to merge their US$20 billion revenue businesses to better compete with the likes of tech titans Meta and Alphabet, and insurer Arthur J Gallagher agreed to buy US broker AssuredPartners for US$13.45 billion.
Oil prices rose as the fall of Syrian president Bashar al-Assad heightened the geopolitical risk in the Middle East, with Brent crude up 1.7% at US$72.30 a barrel at 7am.
Across the Tasman, the Reserve Bank of Australia is expected to keep the target cash rate at 4.35% when it reviews policy today. The kiwi was little changed at 91.01 Australian cents from 90.96 cents yesterday.
And on the local market, Hallenstein Glasson and Marsden Maritime Holding will host their annual meetings, while institutional investors will digest the government’s plans to raise $500 million for state-owned lender Kiwibank.
Reporting by Paul McBeth. Image by Curious News.