US stocks showed some frailty across mid-week trading, slumping across three trading sessions by heavily weighted tech, industrials, pharmaceutical, and telecom companies.
Wall Street's stumble was followed by European markets which also dipped on strong US economic data, and into Asian equity markets, which also faded as the week progressed.
That saw China’s Shanghai composite finishing flat on Thursday and South Korea’s Kospi ending unchanged amid US import tariff concerns.
Oracle was a chief culprit of a slipping S&P 500, sliding 5.6% on a rerating after record gains the prior week and as news emerged on Wednesday it would look to raise US$18 billion ($31.2b) in debt to build out its cloud infrastructure and cater for its AI demand.
Nasdaq-listed EV giant Tesla also closed 4.3% down on Thursday, on the back of a reported 37% decline in European vehicle sales.
That was as Chinese EV manufacturer Build Your Dreams (BYD) outsold its US competitor in the European market for the second consecutive month in August.
Year-to-date, BYD reported a 280% increase in sales overall, with Tesla numbers down by a third year on year.
US government bond markets also experienced some selling, as yields drifted higher after the Federal Reserve interest-rate cut the prior week.
On Friday, ASB chief economist Nick Tuffley said US data suggested the US was “weathering the storm” of tariff disruption better than expected, with estimates for second-quarter GDP growth revised up to 3.8%, capital goods orders rising, and jobless claims edging down.
That good news for the economy, however, wasn’t matched with the mood of the equity and bond markets, which reacted poorly to the Fed’s “less aggressive” stance on interest rate cuts, he said.
Oil prices and gold also continued to edge up last week, the former as Russia banned gasoline and diesel exports until the end of the year. The ban comes after repeated strikes by Ukrainian drones on Russia’s refining plants, the latest in a string of attacks targeting Russian oil infrastructure, which Kyiv says is fuelling the full-scale invasion of Ukraine.
Oil prices reacted with a 4% increase by Friday, supported by comments from US President Donald Trump that Ukraine could recover all the territory thus far lost in the Russian conflict.
New RBNZ Governor Anna Breman.
New RBNZ Governor
Markets locally, meanwhile, were digesting news of the appointment of a new Reserve Bank governor.
Swedish economist Anna Breman will take on the central banks’ top job on December 1 from acting Governor Christian Hawkesby, who is departing the bank but will oversee another two official cash rate decisions in October and November.
Westpac senior economist Satish Ranchhod said he expects the bank to cut the OCR at both of those meetings, on soft labour market conditions.
Ranchhod said while that weighs on household spending, it’s “not all bad news”, with firmness in export earnings, reflected in Fonterra’s announced payout to farmers of $10.16 for the season, signalling further “firm payouts” for the coming year.
Australian and NZ healthcare stocks ResMed and Fisher & Paykel Healthcare also retreated – 2.6% and 4% respectively – after the US Secretary of Commerce initiated an investigation into the importation of personal protective equipment and medical equipment under Section 232 of that country’s Trade Expansion Act of 1962.
The investigation could conceivably lead to tariffs or other trade restrictions if the imports are found to threaten US national security.
Octagon’s Jason Lindsay.
Trans-Tasman retail ‘less worse’
Dual NZ/Australian-listed KMD Brands, meanwhile, posted a net loss of $93.6 million on Wednesday, a result described as “terrible” by its largest institutional shareholder Allan Gray, which holds a 17.7% stake in the retail group.
Octagon Asset Management head of equities Jason Lindsay, however, said its 22% same store sales for Kathmandu across the first seven weeks of the 2026 year was “encouraging” given the cold weather conditions and the traditional trading lull during that period.
Lindsay said recent comments from Australian portfolio managers on retail calls have been instructive, with the common theme that things are “still tough” in NZ, but are flagging better second-half run rates.
Bunnings and Kmart in particular, have pointed to a strong New Zealand recovery this coming year, he said, while MacPac referred to the NZ market as “less worse” for the coming trading period.
