ep 401 | What’s going down with the NZ dollar?

Last Tuesday was a historic night in US politics, with a resounding victory for the Democrats in the midterm election. There was a very positive market reaction the following day, followed by an equally dramatic selloff on day two. Let’s take a step back from the daily swings and consider how markets usually react to midterm elections.

US inflation will take centre stage this week, with the CPI due on Tuesday. Here in Aotearoa, we'll be watching for any market reaction in the wake of the election, while a speech from RBNZ Chief Economist Paul Conway on Tuesday will also be of interest.

Anthropic, the company behind Claude, publicly filed its prospectus with US regulators in late October. It has applied to list on the Nasdaq under the ticker symbol ANT, in what is expected to be one of the biggest market events of the year. Will it be a sure thing, and what might determine whether this listing is a success?

This will be another monster week one, with some major US economic releases, two global central bank meetings and a busy political calendar. The US midterms will be a highlight, before the New Zealand election this coming Saturday. If that wasn't enough, some 140 S&P 500 companies and many others from across the world are due to announce earnings.

It’s not just policymakers, consumers and prospective political leaders who should pay close attention to inflation. Investors also need to be very mindful of how it can impact their holdings and erode their returns. When you’re investing, what you’re really trying to do is maintain (and hopefully grow) your purchasing power. That means you need a clear understanding of the “real” return you’re making on your money.

It's a big week ahead, with the Reserve Bank expected to hike the OCR again, as well as monetary policy decisions in the US, Europe and Japan. Earnings will also be in focus, with close to 180 S&P 500 companies due to report. We'll hear from Alphabet and Microsoft on Wednesday, as well as Amazon and Intel on Thursday and many others in the days ahead.

We’ve seen a bit of a wobble across financial markets this last week or two. For many investors, the response to any setback has become almost automatic. You buy the dip. But what happens if that strategy stops working?

It was a mixed week for global markets, as investors became increasingly concerned about rising oil prices and worries that tech companies were borrowing too much for the AI buildout. US crude rose another 10% finishing at US$101 a barrel, while Brent crude hit $110. The S&P 500 was down 2.0%, while the tech sector slipped 6.4% and the Philadelphia Semiconductor Index slumped 11.4%.

It’s been a strong year so far, with most sharemarkets performing well despite some volatility along the way. With just a few months to go, markets have plenty to contend with. We’ve got the stalemate in the Middle East, more interest hikes on the cards, as well as the New Zealand election and the US midterms. What should we expect, and how are markets positioned to finish the year?

The global reporting season ramps up this week, and it’s expected to be another very strong one. We'll hear from Bank of America, Citigroup, Goldman Sachs, JPMorgan and Wells Fargo, all on Tuesday. Other companies to monitor include Johnson & Johnson and UnitedHealth, as well as ASML and TSMC for clues about the state of AI spending.