The New Zealand dollar was broadly weaker as investors spurned riskier assets with a gloomy US consumer confidence survey adding to the growing unease about the world’s biggest economy.
The Chicago Board Options Exchange’s Volatility Index, known as Wall Street’s fear gauge, stepped higher as investors turned away from riskier assets with the Conference Board’s consumer confidence report falling more than expected and as a report that the White House plans to toughen chip export controls sapped optimism about the artificial intelligence sector.
Bitcoin sank 7.3% to US$87,134 at 7am in Auckland while the tech-heavy Nasdaq Composite declined 0.9% ahead of chipmaker Nvidia’s earnings report on Wednesday. The yield on 10-year US treasuries fell 8 basis points to 4.31%.
The kiwi dollar was swept up in the souring sentiment, falling to 57.16 US cents at 7am in Auckland from 57.33 cents yesterday and declining to 54.43 euro cents form 54.74 cents.
“Driving down risk appetite appears to be the combination of rising US policy uncertainty and weaker economic data, the two being related, against the backdrop of the government’s drive to cut spending, sack Federal employees and raise tariffs,” Bank of New Zealand senior markets strategist Jason Wong said in a note. “In currency markets, safe-havens Swiss franc and Japanese yen have outperformed, while commodity currencies have underperformed, although moves have been well-contained.”
Wall Street’s Dow Jones Industrial Average rose 0.4% in afternoon trading, with Home Depot leading it higher after reporting a stronger than expected sales, with robust demand for appliances, building materials and lumber.
Tightening the belt
Meanwhile, Eli Lilly rallied after the drugmaker began selling higher doses of its weight-loss drug Zepbound in vials in the US at a discount to the injector-pen version, and Denmark’s Novo Nordisk – the maker of rival Wegovy – rallied as telehealth firm Him & Hers Health said it would stop selling an alternative to the weight-loss drug.
Stocks in Europe were mixed as Germany’s DAX 30 dipped 0.1% and France’s CAC 40 declined 0.5%, while London’s FTSE 100 index increased 0.1% as defence stocks rallied on UK prime minister Kier Starmer’s plans to boost defence spending.
The muted investor sentiment is expected to weigh on the antipodes, with Australian futures pointing to a 0.4% decline for the S&P/ASX 200 index. Meanwhile, New Zealand’s S&P/NZX 50 index resumes after its sharpest decline of the year.
Local earnings season continues with electricity generator-retailer Meridian Energy rounding out the major power company results, and Auckland lines company Vector. Media group NZME’s result will provide another gauge of the economic recovery, while horticulture exporter Scales Corp is expected to deliver a strong uplift in earnings.
Across the Tasman, results include mall owner Scentre Group, supermarket chain Woolworths, and tech company WiseTech Global, which has been embroiled in a boardroom dispute as four independent directors abruptly resigned this week.
Australian inflation figures for January are also due today.
Reporting by Paul McBeth. Image from Photo by Niklas Hamann on Unsplash.