ep 376 | The week ahead - Oil prices crash as the Strait of Hormuz reopens
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What is the main topic discussed in this episode?
On Point with Craig's Investment Partners. The information provided here is general in nature and it's not financial advice. It doesn't take into account your situation, objectives, goals or risk tolerance. All investments are subject to risks and none are guaranteed. Before you make any investment decisions, we recommend you contact an investment advisor. For more information about our services or to view the Craig's Investment Partners Financial Advice Provider Disclosure Statement, please visit our website which is craigsip.com. Welcome to On Point. I'm Mark Lister, Investment Director at Craig's Investment Partners, and I'll be talking about a range of topics including economics, portfolio strategy, investor education, and anything else that's happening out there in financial markets.
G'day team, hope you're all well. Let's talk about financial markets last week, then let's turn our attention to what's coming up in the week ahead. It was another fairly volatile week for global share markets. The S&P 500 in the US was down 2%. We saw investors rotating out of some of those high growth tech exposures that have done very well in recent years and putting their money in other parts of the market. So a bit of a change in terms of that positioning under the hood. Emerging market shares suffered in this regard too. Emerging markets in a big way are quite exposed to the likes of Taiwan and South Korea these days. Those indices, those countries have got high exposures to the memory stocks, the chip stocks, which have all had a great run.
And we saw a bit of weakness there too as investors took profit. So EM shares were down 4.5%. Other markets, kind of a mixed bag. Japan was down 2% last week. Europe down very slightly. The UK was up. It was one of the few that rose. It was up 1.4%. Australia down 0.7% and the local NZX 50 flat. Important to note that currency movements have changed things for local investors in terms of those returns. So even though you saw the likes of the US down, you saw Japan down 2%, because the Kiwi dollar has also weakened against those other currencies, and that's partly because of this risk-off tone and because of those interest rate differentials. Our OCR is much lower than what you're seeing overseas. We've seen the Kiwi dollar weaken, so that has very much softened the blow or actually pushed some of those declines into positive territory.
If I look at the US market in June, so we're nearly at the end of June, if we look at the month to date, The S&P 500 is down 3%, but the Kiwi dollar is down almost 6%. So in a New Zealand dollar sense, your US shares are actually up almost 3%. So remember that looking at those underlying indices is important, but you've also got to look at that currency overlay. And at the moment, that is moving in our favour in terms of those investor returns there. Right, US interest rates, they were down slightly, local interest rates down slightly too. Here in New Zealand, you've got a bit of talk about the RBNZ maybe not having to move in July. I see two of the banks, Westpac and ASB, haven't checked the others, but at least those two are calling for the RBNZ to just stay put on the 8th of July.
So that's interesting, and it does tell you that there is potentially a a less aggressive interest rate hiking cycle ahead of us because of what you've seen in terms of oil prices and if that was the case, if the banks are right with those calls, then you definitely might see a bit of support for the local market because we are quite an interest rate sensitive market. Oil prices down heavily last week. US crude was down 10%. That's on the back of hopes for a sustained resolution in the Middle East. US crude is now just below $70 Saturday afternoon when I'm recording this. And right now it's at about $69 or thereabouts. So that is almost 40% below last month's peak. And it's the lowest that we've seen since late February.
So really good news that we've seen something that looks pretty close to a tangible resolution in the Middle East.
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Chapters
4 chapters
1
What is the main topic discussed in this episode?
0:00–4:23
2
What were the global equity market moves and sector rotations last week?
4:23–5:51
3
How did emerging markets and Asia perform amid profit-taking in chip stocks?
5:51–9:54
4
How have currency moves, especially the Kiwi dollar, affected NZ investor returns?
9:54–12:29
Speakers
1 identifiedMore from On Point
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