Latest / Best of Business / Shane Solly: Harbour Asset Management expert on the economic impact of the war in Iran

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Shane Solly: Harbour Asset Management expert on the economic impact of the war in Iran · Best of Business

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  Speaker 2: Hither the Commerce Commission will do absolutely nothing. The fuel
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  Speaker 2: companies pull this truck every single time that oil price
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  Speaker 2: is spike. Then there's the public complaints on talkback for
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  Speaker 2: a few weeks, and then eventually we all move move on.
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  Speaker 2: I'm disgruntled, but submissive. I agree, and it's going to
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  Speaker 2: plan out the way it always has, but they will
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  Speaker 2: probably be a little bit more careful in rocketing the
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  Speaker 2: price up because everybody's watching so closely at the minute. Anyway,
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  Speaker 2: That's what I'd like to think. And on that very subject,
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  Speaker 2: we have Shane Solly, Harbor Asset Management with US High Shane, I, okay,
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  Speaker 2: where's the oil price at now? How does this compare
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  Speaker 2: with previous events?
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  Speaker 3: Yeah, Look, it's really moving quite quickly. So today it's
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  Speaker 3: closing about one hundred and fifteen dollars per barrel. That's
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  Speaker 3: for Brent, up sixty percent from the twenty seventh of February,
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  Speaker 3: which is the day before they're strucks. Last time we
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  Speaker 3: saways Heather was back in twenty ten, twenty fourteen, which
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  Speaker 3: is the hour of spring disruptions. Difference this time around
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  Speaker 3: is these are the attacks on refineries. Are seeing an
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  Speaker 3: increase in gas prices and crackspreads. It's the cost of
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  Speaker 3: turning a bow on the world into jet fuel, for example,
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  Speaker 3: It's about ten times up, so quite a widening. Normally
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  Speaker 3: we see the worst early on until we see the
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  Speaker 3: scope and the breadth of the disruption. But look, it's
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  Speaker 3: nobody's interests for the straits of home is to be closed,
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  Speaker 3: but they are. They effectively are, so we expect to
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  Speaker 3: see a bit of a demand and supply response. Historically,
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  Speaker 3: above one hundred dollars a barrel, we start to see
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  Speaker 3: demand turning off, and we also start to see the
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  Speaker 3: US releasing some of its strategic reserves. So look, it's
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  Speaker 3: going to be pre dynamic. But how high energy prices go,
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  Speaker 3: how long they stay ativated, that will impact the global economy,
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  Speaker 3: central bank policy responses, and how investment markets go. At
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  Speaker 3: the moment, people are taking the negative view.
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  Speaker 2: Okay, talk me through what you're seeing in the capital markets.
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  Speaker 3: So long term bond yours doesn't get talked about a lot.
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  Speaker 3: This is the like ten year government bond yours in
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  Speaker 3: the US. They've gone up by zero point two percent
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  Speaker 3: to about four point one Here in New Zealand they're
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  Speaker 3: up about zero point three five percent to four point
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  Speaker 3: seven percent. That means we're all paying a bit more
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  Speaker 3: for borrowing, so the cost of borrowing money is gone
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  Speaker 3: up for particularly businesses and consumers.
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  Speaker 1: At the time.
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  Speaker 3: Sheer markets actually have been relatively the risk hasn't come
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  Speaker 3: through quite as much. US S and P five hundred
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  Speaker 3: down two percent from its pre strike price, but the
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  Speaker 3: futures of a night here that they're looking like they're
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  Speaker 3: going to be down about two percent. We've seen some
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  Speaker 3: really big moves in other markets, so they're sort of
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  Speaker 3: secondary markets. The career market, for example, is down eighteen percent.
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  Speaker 3: Japanese market down twelve percent from before that pre strike level.
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  Speaker 3: They're both very oil intensive importers, so they're more exposed.
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  Speaker 3: Europe down about seven locally here in New Zealand we're
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  Speaker 3: about four point six percent down from that pre strike level.
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  Speaker 3: Today a bit of a soft day, down three point
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  Speaker 3: one percent, led by ness and companies like Fisher and
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  Speaker 3: Barkla health Care and A two which have been strong
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  Speaker 3: performance before this, and then travel sensitive companies like Upen
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  Speaker 3: Airport and bind senecat of companies like and Fronto and Genteleist.
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  Speaker 3: But New Zeland we tend to be a little less volatile,
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  Speaker 3: more defensive, so not surprising to see us doo less bad.
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  Speaker 2: Yeah, hey, thank you very much. Shane has always appreciate
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  Speaker 2: your time, mate. That's Shane Soley of Harborresset Management.
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