Shane Solly: Harbour Asset Management expert on the Asia-Pacific market reactions to the Middle East conflict

The US and Iran have launched more tit-for-tat strikes over the weekend, resulting in oil prices going up - but what has it done for the markets?

Experts indicate the Asia-Pacific market is still going strong, with the index going up by 1.1 percent.

Harbour Asset Management Shane Solly explained further - and revealed why Korean chipmakers are helping things grow.

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Episode Transcript

Speaker 1 (00:00):
Shane Solly, Harbour Asset Management, is with me.

Speaker 2 (00:01):
Hey, Shane. Evening, Heather.

Speaker 1 (00:04):
How have the markets in our part of the world
reacted to what's going on in the Middle East?

Speaker 2 (00:08):
Yeah, so the Brent oil price has gone up about 1.5%
to $ 97. 70 after this tit-for-tat strikes between Iran and the
US over the weekend. It hasn't actually slowed the Asia-Pac
markets down. The MSCI Asia-Pacific share market, it's up 1% today,
led by strength in the Korean semiconductor chip manufacturers. The
big reason why they've gone up is because OpenAI, one

(00:31):
of these big foundational models, is launching a new model
called GPT-6. Got the market excited about potential boosting demand
for AI computing power. Closer to home, New Zealand share
market down 0.2%. A little bit of weakness in Fisher
and Parkway Healthcare in Britain and Auckland Airport. Tonight, we
had the U.S. share market close, so there'll be a

(00:52):
bit of a delay on the reaction in the U.S.
to the Iran-US situation kick off.

Speaker 1 (00:57):
All right. Now, I see Trump wants some Fed cuts.
Is there actually a case for the cuts?

Speaker 2 (01:03):
The true answer is no. The economic data, it's just
too hot. On Friday, we had a very strong non-farm
payroll number out in the US. The market had been
picking to be 55,000 people get a job. It was
actually 162,000. Unemployment rate in the US is at 4.1%.
It's just making it very hard for a rate cut.
In fact, expectations or bets on a September rate hike

(01:24):
come through. This week, we've got U.S. producer price inflation,
a European central bank rate hike, and U.S. consumer price
inflation out. It's going to make a pretty rough tone
for rate markets later this week, that's for sure.

Speaker 1 (01:39):
Now, are we seeing some signs we might have a
recovery underway?

Speaker 2 (01:43):
Yeah, look, I think we are seeing some grinding numbers
coming through. It's not even going less bad. It's starting
to look positive. Tomorrow, we've got NZ manufacturing activity data out.
And then later in the week on Friday, we've got
the businesses on performance and manufacturing index data out. I
think it's a bit of a flip of the coin
here that if the data is better, then it certainly
reminds us the economy is quite resilient. If it's not,

(02:05):
if it's a bit weak, then it's going to take
some pressure away from the RBNZ to hike rates. Tomorrow,
we've obviously got Westpac consumer confidence and NAB business confidence
out in Aussie. That's important because that economy has been warm.
It's actually starting to slow a bit. Look, I think,
you know, early days, companies we've been talking to are
suggesting things are still a bit tough. They're being cautious,

(02:28):
but they're being cautiously optimistic, mainly because they're getting their
costs under control. So, you know, certainly there's a little
bit of optimism starting to creep in out there.

Speaker 1 (02:35):
Yeah, good stuff. I'm so pleased to hear it. Shane,
thanks very much, mate. Shane Solly, Harbour Asset Management. Heather,
I love the 5% deposit option. This is the only
way I'm going to get into an Auckland house, paying
large rent to teenage boys with a lot going on,
keeping us in a good area with great schools, reduces
the ability. I'm a solo dad. with business struggles.

Speaker 2 (02:53):
For more from Heather Duplessy-Allen Drive, listen live to News
Talk ZB from 4 p.m.

Speaker 1 (02:58):
Weekdays or follow the podcast on iHeartRadio.