NZ Markets Show Mixed Signals Amid Rising Rates and Weak Consumer Spending

Financial markets in New Zealand showed mixed signals on Tuesday, with term deposit rates rising and business confidence improving, but consumer spending remaining weak. Rabobank increased its term deposit rates for terms 18 months and longer, while WBS launched a three-year term deposit rate at 4.55% per annum. The NZIER survey indicated a surge in business optimism for the next 12 months, though current conditions were described as patchy due to a lack of sales.

Consumer spending continued to decline, with Paymark data showing September transactions at $3.6 billion, down 1.3% year-on-year. ANZ's card tracking data, however, showed a 0.5% increase from August, with annual spending growth driven by higher fuel prices and second-hand store purchases. The survey also highlighted a significant shift towards new electric vehicles (NEVs), which accounted for over 70% of new car sales in September.

In political news, polls ahead of the general election showed the National Party losing ground, with only 11 percentage points separating them from the Greens. Meanwhile, Tower increased its full-year profit guidance to between $69 million and $79 million, up from the previous range of $55 million to $65 million. The NZX50 index was up 0.2% by 3pm, with gains in Gentrack, EBOS, and Property for Industry, while Serko and a2 Milk declined.

Looking ahead, the Global Dairy Trade auction on Wednesday is expected to bring mixed results, with whole milk powder and skim milk powder prices likely to rise about 4%, while milkfats may fall around 5%. Swap rates were anticipated to rise by up to 5 basis points, with the RBNZ 90-day rate at 3.22%. Global markets showed varied performance, with the S&P 500 and Nasdaq rising, while Asian markets were mixed. Oil prices eased slightly, and the NZD held steady at 56.1 US cents.