Stock markets in Europe slumped as the latest tariff murmurings from the White House weighed on automakers and as a European Central Bank official raised the prospect of slowing its track for lower interest rates.
Across the Atlantic, Wall Street was mixed as investors weighed up US President Donald Trump’s comments that he’s considering 25% tariffs or more on automobiles, semiconductors and pharmaceuticals.
The UK’s FTSE 100 index was down 0.6%, Germany’s DAX 30 sank 1.8% and France’s CAC 40 dropped 1.2%, while on Wall Street the S&P 500 edged up 0.03% in afternoon trading with the Nasdaq Composite inching up 0.02% and the Dow Jones Industrial Average falling 0.6%.
European automakers such as Volkswagen, Renault and Mercedes-Benz were weaker as investors weighed up the latest comments from the White House. Stock markets in Europe have been on a strong run of late, with defence stocks pushing higher on the prospect of increased military spending on the continent.
The UK’s BAE Systems gained after reporting double-digit sales growth last year due to the increased defence budgets, such as Denmark’s plans to hike military spending by more than 70%.
Comments from ECB executive board member Isabel Schnabel that the central bank might need to pause rate cuts added to the downbeat tone in European markets. The kiwi dollar was little changed at 54.75 euro cents at 7am in Auckland from 54.76 cents yesterday.
South of the border
New Zealand’s Reserve Bank yesterday cut its official cash rate half a percentage point to 3.75% as expected, and brought forward the track of reductions in its forecasts.
“The bank maintained a clear easing bias,” Bank of New Zealand senior interest rate strategist Stuart Ritson said in a note. “Its downwardly revised modelled OCR track aligns with 25 basis point-cuts at each of at the next two meetings and a terminal OCR near 3%.”
Government bond yields crept higher, with the 10-year note at 4.7% ahead of New Zealand Debt Management offering $500 million of bonds today.
The kiwi dollar traded at 57 US cents at 7am from 57.18 cents yesterday, and was almost unchanged at 89.89 Australian cents from 89.88 cents.
The negative sentiment in the Northern Hemisphere is expected to weigh on Australian markets, with futures pointing to a 0.7% decline for the S&P/ASX 200 index today.
Corporate earnings season continues in the antipodes with Rio Tinto reporting a decline in 2024 profit.
Earnings on the NZX scheduled for today include SkyCity Entertainment Group, Auckland International Airport, Air New Zealand, Precinct Properties New Zealand and Vital Healthcare Property Trust.
The Australian Financial Review’s Street Talk column reported yesterday that the Treasury is seeking requests for proposals from investment banks to advise on a $500 million capital raising for Kiwibank.
Meanwhile, The Australian’s DataRoom reported that about 30 parties have expressed interest in Fonterra Cooperative Group’s consumer business. The dairy cooperative yesterday said it’s still gauging market appetite for either a trade sale or initial public offering of the business.
Reporting by Paul McBeth. Image from carlos aranda on Unsplash.