Weekly market wrap up

The Reserve Bank of Australia (RBA) pressed the brake again this week, lifting the cash rate by 25 basis points to 4.60% - its fourth increase this year and the highest rate in around 15 years. The decision was unanimous, with the Bank pointing to a familiar but increasingly uncomfortable mix of persistent domestic capacity pressures and renewed global energy-price risks. The conflict in the Middle East has escalated again, while firms are reporting rising costs and a greater willingness to pass them through to customers. Interestingly, the tone was a little less aggressive than the rate rise itself. Governor Michele Bullock said the RBA hopes the four increases delivered this year will now prove restrictive enough to bring inflation back down, although she stopped short of ruling out further hikes. A day later, inflation provided another reminder of why the Bank remains cautious, with annual CPI jumping from 3.5% to 4.0% in August.

The Warehouse Group delivered a much improved FY26 result this week, despite Kiwi households remaining cautious with discretionary spending. Operating profit climbed to $22.6 million from just $1.3 million a year earlier, while reported net profit returned to positive territory. Sales were broadly steady on a comparable basis, suggesting the turnaround came less from stronger consumer spending and more from improvements inside the business. Better margins, lower costs and tighter inventory management all helped, while net debt fell sharply over the year. Customers stayed focused on value, with lower average selling prices even as volumes improved. The result offers a useful snapshot of retail conditions. Shoppers remain careful, but retailers are finding ways to operate more efficiently. 

US inflation delivered a welcome surprise this week, with the Federal Reserve’s preferred measure of underlying price pressures coming in noticeably softer than expected. Core PCE inflation rose 3.0% over the year to August, below the 3.3% markets had anticipated, while the monthly increase was just 0.2%. Headline PCE inflation was also lighter than expected at 3.4% annually. The result was enough to give markets a lift, particularly after investors had spent recent weeks grappling with higher oil prices, rising bond yields and renewed concerns that US interest rates could remain elevated. Still, inflation remains above the Fed’s 2% target, so this was hardly a victory lap - more a reassuring sign that the inflation engine may not be running quite as hot as feared. For New Zealand, shifts in US rate expectations remain important given their influence on global yields, the US dollar and broader market sentiment. 

Auckland welcomed a particularly conspicuous visitor this week, with Jeff Bezos’ 127m superyacht Koru docking at Wynyard Quarter. Reportedly worth around $800 million, the vessel is hard to miss, making most boats in the marina look like bath toys. Beyond the spectacle, Koru’s arrival highlights the economic value of New Zealand’s superyacht sector. A 2024 industry study estimated that 56 visiting superyachts contributed $212 million to the economy during the 2023/2024 season, an average of roughly $3.8 million per vessel. Around 90% of that spending went towards marine services including maintenance, refits and berthage, with the remainder flowing through tourism and day-to-day spending. Koru will not necessarily follow that same pattern, but its visit puts some very visible attention on a niche industry that supports marine businesses and specialist services across New Zealand.