Devon Funds Morning Note - 14 April 2026

Wednesday 15th April 2026

Blockade Begin

Global

US equities were up higher overnight, with President Trump stating that Iran still wants to make a deal following a deadlock in negotiations and a US blockade of the Strait of Hormuz. The S&P 500 closed up 1.0%, the Nasdaq rallied 1.2%, while the Dow Jones added 0.6%.

Brent crude briefly pushed above US$104 before easing back toward US$99, still about US$5 above last week’s close as oil markets priced in mounting supply risk from a new US naval blockade on traffic to and from Iranian ports. Washington has warned it will interdict ships along Iran’s entire coastline, drawing threats of retaliation from Tehran against vessels and ports and reinforcing concerns about potential disruption to Iranian exports.

Bank of Japan’s Governor Ueda has struck a cautious tone on the US-Iran conflict, stressing uncertainty and the need to monitor its impact on Japan’s economy, prices and financial conditions. His comments saw markets cut the implied probability of an April rate hike in overnight swaps to about 30%, down from roughly 55% earlier in the day, especially given the BoJ has usually signalled past hikes well in advance by flagging rate discussions before meetings.

In the equity markets, Goldman Sachs fell 1.9% after a surprise drop in its fixed income, currency and commodities division, where bond and rates trading revenue fell about 10% and missed analysts’ estimates by more than US$800 million, tempering the impact of a record US$5.3 billion quarter from its equities traders. On the earnings call, CEO David Solomon acknowledged heightened scrutiny of private credit as some retail investors pull money from the asset class but argued that underlying fundamentals remain solid and said Goldman still sees attractive opportunities, particularly given its focus on more stable institutional capital and the prospect of better yields and deal terms as competitors retrench.

SoftBank is canvassing demand for a potential six tranche bond deal split between US dollars and euros, with proposed maturities ranging from around 3½ to 10 years in dollars and four to eight years in euros, extending a busy run of fundraising that has recently included jumbo yen hybrid bonds and a debut euro issue from its mobile unit. The bank looks to load up on debt now to mainly fund an aggressive push into AI, especially its very large commitments to OpenAI and related data centre and infrastructure projects.

On a final note, Sandisk jumped 11.8% after Nasdaq confirmed the flash memory maker will be added to the Nasdaq 100, replacing Atlassian, when the changes take effect on 20 April. Inclusion in the large cap tech benchmark is expected to draw in fresh demand from index tracking funds and other benchmark constrained investors, reinforcing already bullish sentiment around Sandisk’s role as a key supplier to AI driven data centre and storage markets.

New Zealand

The Kiwi market started the week on the back foot as uncertainty surrounded the weekend's negotiations in Pakistan, with the Strait of Hormuz remaining effectively shut, and President Trump’s threat to blockade, the NZX 50 was the first market to respond, falling 1.2%, with domestic companies weighing the index down further.

A2 Milk fell 12.4% after issuing a profit warning, flagging temporary supply-chain disruptions for its China label infant formula, despite demand remaining strong. Issues include a backlog of unfilled Synlait orders (with production now back at required levels), longer product-release and customs timelines due to enhanced testing after the ARA issue, and reduced, more expensive air-freight capacity linked to the Middle East conflict.

Fonterra has promoted insider Richard Allen to CEO, effective 1 May 2026, as the co op pivots more heavily toward high value ingredients following the planned exit from its consumer brands. Allen, currently President Global Ingredients, joined Fonterra as a graduate in 2008 and has held senior roles spanning Farm Source in New Zealand, foodservice in Greater China and leadership of the Atlantic region, giving him deep experience across the co op’s global supply chain and farmer network.

The BNZ–BusinessNZ Performance of Services Index weakened further in March, dropping 1.6 points to 46.0, firmly in contraction territory and well below its long run average of 52.8. All major sub indices, including activity/sales, new orders and employment, remained below 50, prompting BNZ to warn that the combined PMI/PSI now points to the economy edging toward outright contraction and reinforcing its recent downgrades to New Zealand’s 2026 growth outlook.

Markets now price roughly 80bps of RBNZ hikes by December, with the 2 year swap up 8bps to 3.56%. The curve flattened slightly as the 10 year swap rose 7bps to 4.40%, while government bonds outperformed swaps, with the 10 year NZGB yield up 5bps to 4.76%.

Australia

Across the Tasman, the ASX 200 finished the day 0.4% lower, with a more muted reaction to news from the Middle East, albeit optimism is starting to fade as no near-term resolution to the war has yet been sighted.

Oil bounced back up in Asian trade, with Brent and WTI gaining 7.2% and 8.0%, while Energy peers tracked back higher as the session went on, with Karoon (+5.0%), Beach Energy (+3.7%), and Woodside (+2.6%) all rising higher off the back of Trump’s blockade in the Strait.

Tech and Discretionary sectors seesawed down, once again leading the losses, as the odds of a fresh inflation spike, further RBA rate hikes, and a potential recession keep rising. Materials also weighed on the market as Gold fell, with Ora Banda Mining (-9.0%), Bellevue Gold (-4.1%), and Pantoro Gold (-3.9%) the worst performers in the sector.

Elsewhere, the Aussie dollar has slipped back from last week’s three week highs, with markets now firmly focused on Middle East developments and this week’s IMF/World Bank Spring meetings for the broader risk tone. RBA Deputy Governor Hauser and Assistant Governor Hunter will be on the circuit there, and their remarks on “higher for longer” inflation and second round effects will be watched closely as investors refine the roughly 60% odds currently priced for a May rate hike.

Data-wise, while Thursday’s March jobs report still matters, more timely reads from April consumer confidence and inflation expectations may carry greater weight given the post war shock environment.

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