Weekly market wrap up

Electric Avenue provided a fairly convincing test of discretionary spending this week, with the final 15,000 tickets for the 2027 festival selling out within minutes. Nearly 59,000 individual fans joined at least one queue, after 32,000 weekend passes had already been snapped up in April before a single artist was announced. If this year is any guide, that enthusiasm should translate into plenty of activity beyond the festival gates. February’s event attracted close to 90,000 attendances and generated almost $14 million of visitor spending in Christchurch, with more than half of attendees travelling from outside the city and hotel occupancy reaching its highest level in a decade. That money flows through accommodation, hospitality, transport and retail, making major events a useful injection of spending into the local economy. At a time when households are supposedly watching their discretionary dollars, tens of thousands of people competing for festival tickets suggests some experiences remain surprisingly resistant to the cost-of-living squeeze. 

Fonterra delivered a strong FY26 result this week, with Total Group operating profit reaching $3.4 billion, including a $1.2 billion benefit from the Mainland divestment. Underlying operating profit still rose 23.6% to $1.8 billion, while return on capital increased from 11.7% to 14.2%. Total cash returns to farmer owners and unit holders reached $19.6 billion, helped by a final Farmgate Milk Price of $9.69 per kgMS and fully imputed dividends of 73 cents per share. Those returns matter beyond dairy, supporting rural balance sheets, investment and spending across the wider rural economy. Fonterra is becoming more focused on its global B2B ingredients business, but its influence at home remains considerable. .

Donald Trump and Xi Jinping put US-China relations centre stage this week. Xi arrived in Washington for a state visit, with both leaders emphasising cooperation despite ongoing tensions over trade, technology and Taiwan. Xi said competition between the two economies should remain “within bounds”, while Trump highlighted progress on bilateral issues. The visit also coincided with an extension of the US-China trade truce, giving negotiators more time to work through tariffs, rare earths and agricultural trade. As New Zealand’s largest annual goods export market, China provides a direct link between the relationship playing out in Washington and economic conditions closer to home. Shifts in Chinese demand and global trade flows can quickly find their way south. There was plenty of red carpet in Washington this week, but underneath it sits a relationship carrying a fair amount of economic baggage. 

Saudi Arabia restarted its East-West oil pipeline this week, restoring an important route for moving crude from the kingdom’s eastern oilfields to the Red Sea without relying on the Strait of Hormuz. The pipeline had been shut following drone attacks earlier this month and, with capacity of around seven million barrels a day, its return provides some welcome flexibility to a stretched global oil market. Global oil production fell to around 100 million barrels a day in August, while exports from Gulf producers remained well below normal levels as conflict and shipping disruptions continued to constrain supply. Global oil inventories have also fallen sharply since February, leaving less of a cushion when fresh disruptions occur. For oil-importing countries such as New Zealand, those pressures matter through fuel costs, transport and inflation.