NZ Stocks Hold Steady as US Inflation Cools Down
New Zealand stocks remained stable despite concerns about interest rates after the US inflation rate cooled down. The NZX 50 index closed at 13,810.51.
The key driver of this stability was not the US stock market's performance but rather the latest personal consumption expenditures (PCE) inflation reading, which is the Federal Reserve's preferred gauge. This reading came in at a lower-than-expected 3.4% year-on-year, with 'core' PCE, which strips out food and energy prices, also rising to 3%. According to ING, this print was 'cooler-than-feared', aligning with New York Fed President John Williams' view that there's no immediate rush to raise interest rates again.
The lower US inflation rate has a ripple effect on global borrowing costs, which can filter into local wholesale funding and swap rates. This, in turn, influences the borrowing costs for banks and the value of dividend-paying shares. In New Zealand, data was mixed: building consents rebounded in August, but home values fell 0.3% in September, marking a sixth consecutive monthly decline.