Shane Solly: Harbour Asset Management expert on the market reactions to the ongoing tensions in Ukraine

Shane Solly,

Harbour Asset Management,

is with us. Hi,

Shane.

Yeah, hi, Heather.

Right. How have the markets reacted to the ongoing business in Ukraine and the Straits and then the weakness in the tech shares on Friday as well?

Yeah, pretty messy out there. So markets moved to a bit more of a defensive mode today. Investors sort of de-risking. So just to back up, US share market a bit weak on Friday. Technology stocks down. Investors really questioning whether the AI demand, revenue, profitability, whether it's enough to support the trillions of dollars going into this AI compute capacity. What we have seen is today, sorry, US 10-year gamma bond yields, they were down slightly on Friday to 5.06. New Zealand 10-year gamma bonds today, 5.01 flat. And that's all about investors trying to find somewhere to hide out. We've actually seen an interesting thing today. The tick-sensitive Korean share market is actually up. We've also seen the Aussie share market actually up. And it's been boosted by a couple of takeovers, one for Challenger and one for CleanAway. Here in New Zealand, our share market down 0.7% due to weakness in Infratool, Meridian and Chorus. We're actually seeing U.S. share market futures up. They're rebounding from Friday's low. A fall in oil prices down about 1.7% today, and a bit of anticipation that results from Meta and Tesla later this week might actually put a bit more positive news back in the tech trade. So there's some signs of improvement already.

Now, why was the Infratool share price so weak today?

Yeah, good question. So one of Infratool's largest investments is a holding in a business called Canberra Data Centres. Weak technology sentiment on Friday might not help, but we think the main reason that the infertile share price fell 5.1% today was because one of CDC or Canberra data centre's competitors, a business called NextDC, had to put its shares into trading Houghton Aussie as it assesses the impact of a delay to the supplier power at its M3 Melbourne data centre. This is a problem globally that there's a pushback on getting power and getting hard to get power into data centres. So we think, you know, those problems are very much about Next DC, not about Infratool's Canberra data center's growth rate. So we're not actually at this stage worried about it. It's not a Canberra data center issue.

And listen, on the economic data that we got today, a bit mixed, do you think?

Yeah, look, you know, the services index for September month, that was down 0.1% to 50.9. So it's positive. It's above 50. We'll take that. But it's suggesting that that recovery in the services sectors is pretty modest, certainly not as good as last week's manufacturing sector numbers. We had New Zealand September trade deficit. We're at 1.971 billion. Sounds like a big number. It is. But it's a bit of a data gap. bump there we've dropped a good number from the start of the period actual underlying data was quite good export values holding up imports not so bad so not so bad and then finally we had a really good Chinese GDP number that's important for New Zealand it actually beat expectations for the September quarter up 4.5% versus 4.4 big one this week here