Devon Funds Morning Note - 12 March 2026

Thursday 12th March 2026

Where There’s Smoke There’s Fire

Global

US equities are mixed overnight, with the S&P 500 down 0.1%, the Nasdaq up 0.1% while the Dow Jones slipped 0.6%. Stocks and Treasuries are easing as the market balances the near-term relief from crude with the evolving conflict in the Middle East, while Morgan Stanley has argued that fresh oil-price shocks could complicate the Fed's inflation outlook, pushing out the timing of the Reserve’s next rate cut.

The International Energy Agency member countries have signed off on a coordinated release of up to 400 million barrels from their emergency oil reserves, marking the biggest action that the group has ever taken. Still, the WTI and Brent crude climbed more than 4.0% overnight as fighting flares in the Strait of Hormuz, after three vessels were reportedly struck in the key shipping lanes, with the threat levels remaining critical.

Markets have pushed back their expectations for the first Fed rate cut from July to around October, and even that is now only lightly priced in. At the same time, equities are holding up on a “keep calm and carry on” view that Trump will wrap up the Iran conflict relatively quickly, while the bond market is taking a darker view that higher-for-longer oil will keep inflation elevated and stop the Fed cutting as soon as stocks seem to assume.

Elsewhere, private credit funds are staring down a crisis, as JPMorgan has now tightened its lending and marked down the value of some of its loans. Equity investors took this as a warning that today’s funding squeeze for private credit could morph into a broader credit problem if more banks follow suit, so “where there’s smoke there’s fire” selling hit listed alternative asset managers with big private credit arms, driving Ares down 4.8%, Blue Owl 4.7%, KKR 3.2%, BlackRock 1.7% and Blackstone 2.5% on the day.

New Zealand

The Kiwi market gained momentum as the NZX 50 bounced back, rising 1.5% on the back of strong US futures and a calmer oil market. Best performers on the day include Serko (+5.6%), Meridian (+3.0%), and Scales Corp (+2.8%).

Briscoe Group (+2.4%) posted full-year earnings, delivering a robust result amongst a challenging market. Group sales were broadly flat year-on-year as the company sacrificed some margin to protect revenue, pushing gross margin down 1.2% to a decade low. However, management has signalled a clear focus on rebuilding through internal initiatives, aided by improving consumer sentiment.

ANZ have revealed card spend data for February, rising 0.6% on the month (seasonally adjusted) and sitting 4.4% above year-earlier levels, consistent with a gradual recovery in consumer activity after a soft patch through 2025. ANZ noted that, smoothing through monthly volatility, retail card spending is running at around 0.7% quarter on quarter, suggesting households are loosening the purse strings a little but are still far from a boom.

RBNZ figures have shown a big shift in how new owner-occupiers are structuring their debt, with 47% of all new mortgages in January fixed terms of two years or longer, compared with just 7% a year earlier, suggesting households are increasingly prioritising rate certainty over flexibility as they eye the risk rates could move higher again from here.

Elsewhere, NZ’s leading producer of natural gas, Todd Energy, has been chosen to lead a flagship government-backed project to drill New Zealand’s first geothermal exploration well using up to 60 million dollars from the Regional Infrastructure Fund to test ultra deep, ultra hot resources near Taupō. If successful, the 5–6 km-deep well could open the door to next generation geothermal generation with enough high temperature energy to materially boost long run renewable supply, which is strategically important for gentailers seeking firm, low carbon baseload to support electrification and dry year security.

Australia

Across the Tasman, the ASX 200 extended its streak, gaining another 0.6% as investors continued to wade back into equities following the positive sentiment. Outperformers were seen in both Materials and Banks, helping offset the increased likelihood that the RBA hikes rates next week.

Markets ramped up bets on an RBA hike after deputy governor Andrew Hauser’s hawkish comments on a podcast reinforced the Bank’s message on inflation and policy risks. In the interview, released on the RBA’s website, the deputy governor warned that inflation is still “too high”, stressed that oil price volatility and the Middle East conflict pose upside risks to prices, and said there would be “genuine policy debate” about further tightening at the next Board meeting. In response, the market priced in a 65.6% chance of a hike.

Within Materials, BHP added a further 1.4%, extending recent gains after falling 10% last week. Lynas Rare Earths was the standout (+16.2%) after striking an amended deal with the Japanese government that locks in a US$110/kg price floor and additional upside once prices move above US$150/kg. In the same space, gold miners jumped back into headlines as the precious metal rallied 1.5% on a softer US dollar, while Ora Banda Mining soared 21.5% after unveiling a major upgrade to its gold resource at the Round Dam deposit.

At the other end, Utilities were the weakest, AGL Energy sank 5.5% after a broker downgrade, while selling pressure spread back into the Tech sector and REITs as the latest back up in bond yields reminded investors that growth and yield names remain vulnerable to any renewed tightening in financial conditions. In currency, the AUD surged to US71.75c on weakness in the dollar.

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