Latest / Best of Business / Brendan Larsen: Milford Asset Management expert on the market reactions to the ceasefire deal

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Brendan Larsen: Milford Asset Management expert on the market reactions to the ceasefire deal · Best of Business

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  Speaker 2: Thank you, Roscoe seventeen past six, Brendan Lass and Milford
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  Speaker 2: Asset Managements with us ALO Brendan Evening. How have the
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  Speaker 2: markets reacted to the ceasefire deal?
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  Speaker 3: Yeah, look, some positive developments today around that, but still
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  Speaker 3: I guess a lot to work through over the coming weeks.
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  Speaker 3: Since the announcement, we have seen a material rally in
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  Speaker 3: risky assets broadly on the back of the news, so
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  Speaker 3: US shares up around three percent and futures trading in
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  Speaker 3: Australia and New Zealand shares up strongly as well. Investor
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  Speaker 3: positioning and shares had reduced significantly over the last few
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  Speaker 3: weeks in response to the conflict, and so some of
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  Speaker 3: that is a reflection of that positioning as well as
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  Speaker 3: the sort of reduced downside risk. Given these positive developments,
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  Speaker 3: I think the reaction in Europe is going to be
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  Speaker 3: interesting the sea as well. European markets had been hit
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  Speaker 3: very hard given their reliance on energy imports, and so
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  Speaker 3: signs of a positive outcome should mean that European assets
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  Speaker 3: regained some of the losses they saw in March. The
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  Speaker 3: US dollar was also weaker. On the back of this,
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  Speaker 3: they used all had been kind of one of the
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  Speaker 3: few places to hire it. Over March, sort of safe
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  Speaker 3: haven attributes re emerged, and so it's logical that it
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  Speaker 3: sort of underperforms as the risk of a prolonged conflict reduces.
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  Speaker 2: Now, what did you make of the Reserve Bank keeping
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  Speaker 2: the ocr on hold today?
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  Speaker 1: Yeah?
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  Speaker 3: Look, look, I thought a lot of the release was
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  Speaker 3: similar in tone to what we'd heard from from the
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  Speaker 3: governor a few weeks ago. However, there was some firming
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  Speaker 3: in language around their response to inflation, given that oil
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  Speaker 3: prices had surged up until their forecast were struck a
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  Speaker 3: couple of days ago. They did reiterate that the New
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  Speaker 3: Zealand economy is entering this energy shock from a much
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  Speaker 3: weaker starting point than in twenty twenty two, with a
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  Speaker 3: looser labor market and subdued domestic demand, and so all
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  Speaker 3: of these things should mean that spare capacity in the
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  Speaker 3: economy should result in fewer second round impacts on medium
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  Speaker 3: term inflation this time around. They also outlined some sort
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  Speaker 3: of key indicators to watch which influenced medium term inflation
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  Speaker 3: and as such their policy response, which were things like
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  Speaker 3: wage growth, inflation expectations, and core inflation. So we'll be
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  Speaker 3: watching all of these things very closely from here.
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  Speaker 2: And what's been the market reaction?
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  Speaker 3: So market pricing for hikes moderated a little bit after
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  Speaker 3: the statement, but this was reversed quite quickly. Following the
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  Speaker 3: press conference, the governor was probed around the timing of
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  Speaker 3: policy tightening and response to inflation, and some of her
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  Speaker 3: responses were interpreted by the market as a little bit
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  Speaker 3: more hawkish. We think the message was clear there are
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  Speaker 3: upside inflation impacts from the energy shock in the near term,
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  Speaker 3: but the focus for policy remains on medium term inflation,
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  Speaker 3: which given spere capacity in the economy, should be less
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  Speaker 3: severe and so policy will react to medium term inflation.
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  Speaker 3: Spear capacity does not contain second round effects. The OCAI
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  Speaker 3: adjustments will be required.
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  Speaker 2: Ye, good stuff, Hey, thank you as always Brendan Brendan
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  Speaker 2: Larson Milford Ashet Management
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