Yovich & Co Market Update - 14 September 2026.

The NZX 50 fell around 2.90% for the week, its steepest weekly decline in four years, as renewed tensions in the Middle East and expectations of further US interest rate increases weighed on markets. Friday was particularly weak, with the index down 0.95%. Materials, technology, healthcare and consumer staples were among the weaker sectors, while utilities proved more resilient. New Zealand economic data was relatively light. The BNZ-BusinessNZ Performance of Manufacturing Index eased to 53.1 in August from 54.3, but remained above the 50 level that separates expansion from contraction and above its long-term average. Businesses continued to highlight cost-of-living pressures and the Middle East conflict as key concerns.

Australian shares were among the week's weakest performers, with the All Ordinaries falling 3.09%. Higher oil prices and rising bond yields increased concerns that the Reserve Bank of Australia may need to raise interest rates further. Consumer confidence also weakened sharply, with the Westpac-Melbourne Institute Consumer Sentiment Index falling 5.2% to 84.4 in September. Mortgage holders were particularly cautious, reflecting higher interest rates, fuel costs and softer housing conditions.

The Shanghai Composite declined around 1.08%, with higher oil prices, rising global bond yields and expectations of tighter US monetary policy weighing on sentiment. Chinese inflation also picked up, with consumer prices rising 0.8% over the year to August, while producer prices increased 3.8%. Higher energy and commodity prices were a key driver, although underlying domestic demand remains relatively subdued.

The FTSE 100 fell approximately 1.70% for the week, declining from 10,831.09 to 10,650.44. The UK produced one of the week's bigger upside economic surprises. GDP grew 0.4% in July, versus expectations for essentially no growth, after increasing 0.3% in June. Over the three months to July, GDP also increased 0.4%. Services output rose 0.4% in July, production 0.2% and construction 0.1%.

In the US, the Dow Jones fell around 1.6% and the Nasdaq Composite declined 0.66%. Inflation remained a key concern, with August CPI rising 0.4% for the month and 3.4% over the year. Producer prices were also strong, driven partly by higher fuel and energy costs following renewed disruption in the Middle East. At the same time, the labour market remained resilient. The combination of persistent inflation and firm employment significantly increased expectations of another Federal Reserve interest rate increase, with markets pricing an approximately 80–85% chance of a 0.25% hike at the upcoming meeting.

 
Source: LSEG

Investment News         

Scales Corporation (SCL.NZ) - increases ownership of Esro Petfood
Scales Corporation announced it has acquired the remaining 50% share in its European business, Esro Petfood BV, for nominal consideration, taking full ownership of the business. The move strengthens Scales’ commitment to medium-term growth opportunities in Europe and means Esro Petfood’s results will be fully consolidated from September 2026. Scales also said it intends to rebrand Esro Petfood to support both supply and demand in the region, while senior group executives remain in Europe focused on improving operating performance and providing stability for customers, suppliers and employees. Bulls will view the move as a step toward greater control, better strategic alignment and long-term growth in the European petfood market; bears may note that management still needs to improve performance in the business and the benefits of the rebrand will take time to emerge. Share Price Reaction: The announcement should be seen as modestly positive, although the market reaction may be measured given Scales has left its full-year guidance unchanged.
Current Share Price: $6.80, Consensus Target Price: $7.69, Forecast Gross Dividend Yield: 3.75%.

Oracle (ORCL.NYS) - Q1 FY27 result and AI cloud demand
Oracle reported a strong Q1 FY27 result, with total revenue up 30% to US$19.35b and GAAP operating income up 57% to US$6.7b. The key market focus was Oracle Cloud Infrastructure, where revenue increased 121% to US$7.39b, showing that demand for AI-related cloud computing remains very strong. Total cloud revenue increased 62% to US$11.61b, supported by growth in both cloud infrastructure and cloud applications. Oracle also lifted its FY27 outlook, expecting total revenue of at least US$90b and non-GAAP earnings per share of US$8.10. Bulls will focus on the very strong AI cloud growth, higher guidance and Oracle’s growing role in data-centre infrastructure; bears may note that the business is spending heavily to build capacity, margins remain under pressure, and investors are still watching how quickly large AI contracts convert into sustainable cash flow. Share Price Reaction: Oracle shares initially rose strongly after the result, but later gave back gains as investors balanced the very strong cloud growth against ongoing concerns about AI spending, margins and execution risk.
Current Share Price: $150.28, Consensus Target Price: $247.53, Forecast Dividend Yield: 1.37%.

Fonterra Shareholders’ Fund (FSF.NZ) / Fonterra Co-operative Group (FCG.NZ) - FY26 earnings update
Fonterra advised on 2 September 2026 that it now expects FY26 underlying earnings to be at the top end of its previous 60 to 70 cents per share range, with the final result and dividend to be confirmed when it reports on 24 September 2026. The update suggests the co-operative has finished the year strongly, supported by disciplined cost control, improved earnings quality and ongoing demand across its core dairy ingredients and foodservice businesses. Fonterra and the Fonterra Shareholders’ Fund also confirmed they have terminated their dividend reinvestment plans, which had been suspended since 2021. In simple terms, shareholders and unit holders will no longer be able to automatically reinvest dividends or distributions into additional shares or units under those plans, meaning future payments will be received in cash unless another arrangement is introduced. Bulls will focus on the stronger earnings outlook and the potential for a solid dividend; bears may note that the final dividend has not yet been confirmed, and earnings remain exposed to global dairy prices, foreign exchange movements and milk price dynamics. Share Price Reaction: The update should be modestly positive for sentiment, with investors likely to focus on the stronger earnings outlook ahead of the 24 September result, while the dividend reinvestment plan termination is more of an administrative change than a major market-moving event.
Current Share Price: $7.68, Consensus Target Price: $7.37, Forecast Dividend Yield: 8.47%.

Nvidia (NVDA) / SpaceX(SPCX) - AI infrastructure partnership
Nvidia announced that SpaceXAI will use its new Vera CPUs and Vera Rubin platform to support large-scale AI workloads, including systems linked to Grok and future orbital computing. The announcement highlights how AI infrastructure demand is moving beyond traditional data centres, with SpaceXAI aiming to scale computing capacity on Earth and eventually into space. Bulls will see this as another example of Nvidia’s central role in the AI build-out, while also supporting SpaceX’s push into high-value AI compute services. Bears may note that these projects remain capital-intensive, technically complex and dependent on future demand for AI computing. Share Price Reaction: Nvidia sentiment remains supported by continued AI infrastructure demand, while SpaceX-related exposure is increasingly being viewed through the combined lens of launch, Starlink and AI compute growth.
NVDA - Current Share Price: $218.29, Consensus Target Price: $322.88, Forecast Dividend Yield: 0.35%.
SPCX - Current Share Price: $151.21, Consensus Target Price: $230.88.

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