ANALYSIS: Global markets performed strongly last week, with the Dow Jones gaining 1.6%, the S&P 500 rising 1.7%, and the Nasdaq rallying 2.1%. In Europe, the STOXX 50 gained 1.4%. Asia was generally softer.
There was some disquiet in the US regional banking sector as lenders Zions and Western Alliance tumbled amid fraud-linked loan disclosures. However, investors viewed these as one-offs and instead focused on a strong start to the earnings season, led by the major banks. JPMorgan Chase, Goldman Sachs, and Wells Fargo all beat estimates and struck an upbeat tone on the health of the U.S. economy.
Gold prices hit a record high of around US$4,380 (up more than 60% this year), although geopolitical tensions eased somewhat. There was a brief ceasefire in Gaza (since broken), while the White House made conciliatory remarks around a potential trade deal with China.
Positive signs on the US economy also came from American Express, whose shares rallied more than 7% on Friday after reporting a 16% increase in net income to US$2.9 billion. Total net revenue climbed 11% to an all-time high of US$18.43 billion. Amex attributed the strong results to spending by younger customers - millennials and Gen Z now account for 36% of total card member spending, make 25% more transactions than older customers, and represent 75% of new platinum and gold sign-ups.
The company launched a new platinum card during the quarter, featuring enhanced perks. Despite raising the annual fee by US$200 to US$895, it received over 500,000 new requests in the first few weeks. Premium brands like Amex are benefiting from the global demand for luxury products amid an ongoing concentration of wealth - one analytics firm found that the top 10% of U.S. households account for nearly 50% of all consumer spending.
The results also offered a positive insight into US consumer health. Amex said customers are “in a good place” and paying their bills, and it upgraded its full-year revenue growth forecast to 9–10%.
Elsewhere, Apple rose 3% last week, and Alphabet (Google’s parent) soared 7%. Shares in Oracle fell after the company shared details of its ambitious five-year growth plan, targeting 31% annual revenue growth to US$225 billion by fiscal 2030, with its cloud infrastructure business projected to contribute US$144 billion of that total. Investors were disappointed by the lack of detailed guidance on costs and concerned about potential margin pressure on major AI deals, such as with OpenAI. The stock fell 7% on Friday, though it remains up 75% for the year.
This week, US data flow may be limited due to government shutdown risks. The US CPI is due, with annual inflation expected to hit 3.1%, the highest since May 2024. Global PMIs (purchasing managers indices, an a forward-looking measure of business activity) are also scheduled, alongside earnings from Netflix, Tesla, Coca-Cola, IBM, Intel, and Ford.
The ASX 200 rose 0.4% last week. An unexpected rise in the unemployment rate to 4.5% has increased expectations of another RBA rate cut on Melbourne Cup Day. A busy week of AGMs lies ahead, with BHP among the companies reporting trading updates.
The NZX 50 fell 1.3% last week. Fisher & Paykel Healthcare weighed on the index, down 2.2%, while Infratil gained 1.3%. Infratil’s data-centre business, CDC, signed a new partnership with Firmus Technologies and Nvidia for a 40 MW facility. CDC is one of the largest owners and operators of data centres in Australasia.
This morning Infratil has announced that it has also agreed to acquire an additional 4.9% stake in Contact Energy from TECT Holdings for $437.7 million. The purchase will be funded through a mix of debt and new shares issued to TECT at $12.43 per share, raising Infratil’s shareholding in Contact to 14.3%, up from 9.4% following its merger with Manawa Energy.
On the data front, Stats NZ reported that annual inflation has returned to 3%, with consumer prices up 1.0% in the September quarter. Annual CPI is the highest since June 2024, and is at the top of the RBNZ’s 1–3% target band, but the result is in line with expectations.
While a weaker New Zealand dollar won’t help imported costs, several domestic price indicators are easing. Food prices, a key driver of quarterly inflation (vege prices rose 12%), fell in September for the first time since February, and rent growth is at its lowest level since 2011. Council rates rose 8.8%, but are not subject to influence by the OCR.
Overall demand remains soft, and as the RBNZ noted after its recent 0.5% rate cut, there is plenty of spare capacity in the economy. Inflation is expected to return to the 2% midpoint of the target range by mid-2026. With the Bank focused on supporting growth, another 0.25% rate cut next month remains likely.
This week’s local focus includes dairy auction results, card spending data, and AGMs from Meridian Energy, Fletcher Building, and Auckland Airport.