RBNZ throws markets a curveball
SPY•The Reserve Bank of New Zealand unexpectedly held rates, sending the New Zealand dollar down more than 1%. Australia’s inflation picked up in the third quarter, while SK Hynix reported quarterly profit up more than sevenfold and announced about $75 billion in shareholder returns.
1. RBNZ holds rates
The Reserve Bank of New Zealand unexpectedly left rates on hold in a narrow vote, despite markets having priced in a more than 70% chance of a hike, Westpac said. The New Zealand dollar fell more than 1%, while the Australian dollar rose 2% against it to its highest level in 13 years. The decision came with agreement that tighter policy is necessary.
2. Central bank decisions ahead
The Federal Reserve and Bank of Canada were due to announce policy decisions later Wednesday. The Fed was widely expected to hold rates, while markets saw the Bank of Canada hiking by 25 basis points, though that expectation could change. Australia's inflation rose in the third quarter on higher fuel costs, and underlying price pressures reinforced expectations of a fifth rate hike as soon as next week.
3. AI and earnings in focus
SK Hynix reported quarterly profit up more than sevenfold and announced shareholder returns of about $75 billion. Earnings from Alphabet and Microsoft were in focus as investors sought evidence that AI investment can deliver swift returns. Rising bond yields at AI cloud providers such as CoreWeave and record costs to insure Meta debt added to concerns about funding the AI infrastructure buildout.
