Daily Market Commentary 28th September 2023

US equities continue to tumble as inflation fears persist. Energy prices are soaring, once again, driving inflationary pressures. Oil blew through US$93/barrel, a direct result of cuts to global supplies by Russia and Saudi Arabia. To add to the crises, the Russian ban on diesel exports. Energy prices are a major trigger for inflation, and this appears to be on the march. US Bond Yields continue to surge, hitting fresh 16-year highs. The apparent readiness of the Fed, to once again raise rates, compared to the pause imposed by the Bank of England and the ECB, have served to offer attractive interest rate differentials. This has hit currencies hard, with the EUR plunging below 1.0500, while the GBP has crashed to 1.2100.

The rising reserve has also hurt the commodity currencies, with the AUD plunging to 0.6330, while the NZD has dipped below 0.5900. Australian inflation numbers were a warning sign o the RBA. CPI readings rose to 5.2%, fuelled by energy prices and surging rents, (sparked by a massive rise in immigration. The RBA has a new Governor, Michele Bullock, who was sent in to sort out the inflation problem. The political pressure is immense, for her to hold interest rates lower, but in the face of surging inflation, she will be forced to act. NZ Business Confidence data will be released today. This is an influential number for domestic markets. Global Markets will continue to focus on inflation and growth.