Latest / Best of Business / Remy Wisenberg: Milford Asset Management expert on whether the markets price in the OCR increase

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Remy Wisenberg: Milford Asset Management expert on whether the markets price in the OCR increase · Best of Business

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  Speaker 2: With us now as Remy Weisenberg of Milford Asset Management, Hi,
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  Speaker 2: Remy Hi, had that all right? What was the market
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  Speaker 2: expecting going into the OCR announcement today?
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  Speaker 3: Yes? Today, it was actually a bit of a tricky one,
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  Speaker 3: and we actually saw market participants were quite divided on
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  Speaker 3: the outcome because there were pretty good arguments for either way,
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  Speaker 3: a hike or a hold. But what we did see
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  Speaker 3: was that a hike was more than seventy percent priced
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  Speaker 3: by the market going into the announcement, two hikes fully
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  Speaker 3: priced in by the end of the year, and nearly
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  Speaker 3: four hikes price within the next twelve months. So it
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  Speaker 3: wasn't really a question by the market whether the Reserve
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  Speaker 3: Bank would eventually raise the OCR. It was more a
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  Speaker 3: question of when, how quickly, and how many hikes. And
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  Speaker 3: that's why today's messaging around future OCR decisions was really
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  Speaker 3: important because anything that's too out of sync with what
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  Speaker 3: the market is expecting that can actually cause sharp corrections
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  Speaker 3: in market pricing for interest rates.
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  Speaker 2: And how did the market then react after the announcement?
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  Speaker 3: Yes, so I guess because, like I said before, seventy
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  Speaker 3: over seventy percent already priced in for a hike, so
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  Speaker 3: it wasn't too unexpected. However, the messaging was clear that
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  Speaker 3: there will be more interest rate increases, the caveat being
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  Speaker 3: the timing is undercertain, So I think, overall, broadly all
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  Speaker 3: in line with what the market was already thinking. We
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  Speaker 3: did see some minor reaction in shortened interest rates, so
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  Speaker 3: they rose marginally post the announcement. We saw a bit
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  Speaker 3: of strengthening in the New Zealand dollar against key currencies,
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  Speaker 3: but overall no drastic moves because there wasn't really anything
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  Speaker 3: to drive the market to materially deviate from what it
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  Speaker 3: was already pricing.
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  Speaker 2: All right, now, listen what happened with the ins and
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  Speaker 2: X sorry, with the SpaceX so.
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  Speaker 3: BaseX that has joined the Nasdaq one hundred index from
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  Speaker 3: yesterday now. Their shares were down six point eight percent overnight,
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  Speaker 3: and the Nasdaq one hundred itself was also down one
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  Speaker 3: point five percent overnight. So it's a very tech heavy index.
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  Speaker 3: It includes many names that have links to AI, including SpaceX.
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  Speaker 3: We also saw some big pullbacks and some names in
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  Speaker 3: the semiconductor and chip maker space. Those stocks in particular,
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  Speaker 3: they've been performing pretty well year to date, so I
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  Speaker 3: think some of that move might have been explained by
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  Speaker 3: just that natural rotation into other stocks as investors they
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  Speaker 3: take profit and they redeploy. But at the same time,
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  Speaker 3: there has also been some headline noise around AI, so
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  Speaker 3: there's been questions around expectations if they're too high. There's
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  Speaker 3: also been some questions around the shift from token maxing
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  Speaker 3: to token minimizing and a few other headlines, and I
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  Speaker 3: think that's caused some general AI jetters, which has seen
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  Speaker 3: some of these stocks come off a bit. But we
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  Speaker 3: are coming into earning season, so if we start to
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  Speaker 3: see some positive updates from these companies come out of that,
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  Speaker 3: that could help to ease some of these AI fears.
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  Speaker 2: Interesting. Remy, thanks very much, appreciate it. Remy Wisenberg, Milford
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  Speaker 2: Asset Management.
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