Saudi Oil Rebound Boosts New Zealand Stocks

New Zealand stocks rose on the back of data showing Saudi Arabia's oil exports rebounding above 4 million barrels a day in September, easing near-term supply anxiety.

This news is significant because Saudi Arabia is OPEC's heavyweight, and changes in its export flows can shift expectations for global oil prices. According to tanker-tracking firm Kpler, cited by Reuters, shipments rose to slightly above 4 million barrels a day in September so far from 2.4 million in August.

The rebound in Saudi exports is good news for New Zealand's inflation story. Fuel is imported and feeds quickly into consumer prices, so a looser supply backdrop can lower expected inflation and make investors think the Reserve Bank of New Zealand (RBNZ) won't need to push interest rates as high.

In fact, ANZ expects the RBNZ to raise the official cash rate by 0.25 percentage points in October, then hike twice more in February and March, peaking at 3.5%. However, if extra Saudi barrels keep oil-price pressure contained, markets can shave a bit off the inflation path they were bracing for.

This could lead to lower yields on New Zealand government bond yields and interest-rate swaps, which move with expectations for where policy lands. Lower yields can be a tailwind for rate-sensitive NZX shares whose valuations depend heavily on the discount rate investors use to value future profits.