Market Overview
Key Points:
• New Zealand has shifted right as the outgoing Labour Party is hammered as preliminary votes in the 2023 Elections are in, this ends 6 years of Labour Party rule. The new Prime Minister Chris Luxon saying- “people had voted for change”.
• Planned Israeli attacks on Gaza have been delayed.
• Consensus has turned positive in the United States as a looming recession may not be on the cards. The Fed is done raising rates and inflation will continue to soften. Strong labour markets and rising incomes support consumer demand which in turn are fuelling economic growth. Most analysts predict the Fed will start cutting rates in the second half of next year as GDP eases and the unemployment rate rises to potentially 4.4% from 3.8% now.
• The ECB will keep interest rates high for a prolonged period to get inflation back to 2.0%
• NZ CPI third quarter 2023 dips to 5.6% y/y from 6.0% with the largest contributor being food.
• The US Dollar (USD) has been the strongest currency in the past week while the New Zealand Dollar (NZD) has been the worst performer.