Global Markets Gain on Improved Risk Appetite NZD Recovers from Oversold Levels

Global markets have shown a surge in risk appetite, with US equities reaching new record highs. The S&P 500 climbed 0.7%, led by gains in the Utilities and Real Estate sectors, while the Nasdaq Composite continued its upward trend with a 0.6% increase. Meanwhile, global interest rates edged lower, and credit spreads narrowed, contributing to a weaker US dollar.

In currency markets, the NZD/USD pair saw a modest gain, recovering from an oversold level. The New Zealand dollar strengthened against most major currencies, with NZD/JPY rising to just below 89 and NZD/AUD reaching 0.8055. The DXY index, which measures the US dollar against a basket of currencies, fell 0.3%, retreating from an overbought position.

Economic data released overnight included a wider-than-expected US trade deficit for August, driven by increased imports of crude oil, gold, and semiconductors. German factory orders slumped 10.6% month-over-month, although the decline was largely due to a drop in major orders. The French presidential candidate Marine Le Pen proposed a plan to reduce the fiscal deficit to 3.7% of GDP next year, which, despite skepticism, supported a narrowing in French-German bond spreads.

In New Zealand, the latest Quarterly Survey of Business Opinion indicated ongoing economic recovery, with strengthened employment intentions and elevated inflation gauges. The market slightly increased the probability of an RBNZ rate hike later this month, with NZ swap rates and NZGBs ending the day higher.