The New Zealand dollar drifted lower and Australian futures are pointing to a softer day in antipodean stock markets as investors brace for another week of tariff talk from the US administration.
The kiwi dollar fell to 56.60 US cents at 7am in Auckland from 56.82 cents on Friday, with investor appetite for riskier assets cooling at the end of last week when US President Donald Trump continued his trade offensive, signalling new tariffs would be announced this week.
The S&P 500 index fell 1% on Friday and Germany’s DAX 30 slipped 0.5%, while Australian futures are indicating the S&P/ASX 200 index is heading for a 0.8% decline today.
“The S&P fell to the session lows and ultimately closed 1% lower, after it was reported President Trump intended to issue reciprocal tariffs this week, in a further escalation of his trade war,” Bank of New Zealand senior interest rate strategist Stuart Ritson said in a note. “The US dollar was broadly stronger in offshore trade with the dollar index gaining approximately 0.5% compared with the NZ close on Friday.”
While investors continue to ponder the heightening trade tensions, Trump and Japanese prime minister Shigeru Ishiba may have reached a deal over the blocked acquisition of US Steel by Nippon Steel, with the Japanese steel company investing in its American peer rather than outright purchasing it.
US inflation data this week will be a focus for investors after figures on Friday showed the world’s biggest economy added 143,000 jobs in January, slightly less than expected, although with large revisions in prior months.
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US earnings growth in the December quarter have grown faster than expected as the world’s biggest economy remains in good health, despite fears about the impact tariffs will have on inflation and whether that will stall the Federal Reserve’s plans to cut interest rates.
Meanwhile, British oil major BP is facing greater shareholder activism with Elliott Management building a stake in the firm and is reportedly going to push for more dramatic change.
Domestic corporate earnings season kicks off this week with muted expectations although there’s slightly more optimism about Australia’s fortunes.
Vulcan Steel is the first major company to report on the NZX on Tuesday followed by Skellerup on Thursday, while across the Tasman, the Commonwealth Bank of Australia’s result on Wednesday is the main earnings announcement for the week.
Local data this week include credit and debit card spending and a partial inflation reading for January.
Reporting by Paul McBeth. Image from Curious News.