Devon Funds Morning Note - 29 September 2026

Tuesday 29th September 2026

Oil and yields in control

Global

US equities fell overnight as global bond yields rose further. The move extended the selling seen in Asia on Monday, after Trump rejected Iran's proposal to reopen the Strait of Hormuz. At one point, the S&P 500 fell almost 1% as higher energy costs added to expectations of further Fed hikes. Both stocks and bonds recovered some ground when oil prices eased.

Brent traded above US$108 a barrel, then fell back on reports that Trump was open to sanctions relief linked to nuclear issues. That contract expires this week and is trading well above the more actively traded December contract, signalling tight near-term supply. The two sides remain far apart. Tehran is standing by its rejected proposal, although Foreign Minister Abbas Araghchi is reportedly still due to meet mediators in New York.

Oil drove the moves in bond markets, and no major economic data were released. The US 10-year Treasury yield reached 5.27% during the session before easing as oil pulled back. In Europe, the German 10-year Bund yield climbed to 3.65%, its highest level since 2009. The US dollar strengthened as yields peaked, but it ended little changed. The yen did slightly better after Japan's top currency diplomat, Atsushi Mimura, reportedly said markets should heed the "very clear" warning on yen weakness that Tokyo and Washington sent last week.

Gold fell more than 3% to around US$4,100 an ounce. Its September fall has been unusual because gold ETFs have not seen the outflows that usually accompany a sustained decline. Instead, the selling has come mainly from hedge funds and other fast-money investors, while steady ETF holdings and renewed central bank buying have helped limit the fall. However, ETF flows often lag price moves. If holders sell later, that could add pressure just as gold approaches key support near its 2026 lows of around US$4,000 an ounce.

In the market, Nvidia increased its share buyback programme by a record US$150 billion, reflecting chief executive Jensen Huang's confidence in the company's continued growth.

Software stocks fell after Meta launched Meta Enterprise Platform, which is designed to bring its Muse AI agent to more businesses and developers. Meta has hired MongoDB's president and chief executive to lead the new enterprise AI platform, which Mark Zuckerberg called "the next major pillar of our business."

Elsewhere, Paramount Skydance has started selling more than US$44 billion of US dollar and euro bonds to fund its acquisition of Warner Bros. Discovery. SpaceX's Starship rocket reached orbit for the first time on Monday morning, a major milestone for the programme, despite an engine failing during the ascent.

New Zealand

The NZX 50 started the week gaining 0.1%. Precinct Properties rose 3.3%, partly recovering from Friday's 14-year low. Meridian Energy added 2.2%, Spark rose 2.1%, while Fisher & Paykel Healthcare gained 0.8% to close at $45.37.

Gentrack was the weakest stock during the day, down 3.7%. That extends its fall to about 12% over five days and 19% over the past month. Briscoes (-2.9%), Sanford (-0.4%) and Vulcan Steel (-1.4%) also traded lower, reversing part of Friday's gains for Sanford and Vulcan.

Looking at market news, AFT Pharmaceuticals has signed an exclusive development, licence and supply agreement with Mikasa Seiyaku to bring Maxigesic IV to Japan. AFT will receive an upfront licence fee, followed by development milestone payments tied to progress on the regulatory submission and to reimbursement pricing in Japan. After launch, it will also earn royalties on commercial sales.

Lastly, Synlait Milk reported a net loss after tax of $75.4 million for the year and says operations returned to stability in the second half. The first half was hurt by the knock-on effects of manufacturing problems at its Dunsandel site. Chief executive Richard Wyeth also left after only 12 months, and Leon Fung has been acting chief executive since May. In April, Synlait sold its loss-making North Island assets to Abbott for $307 million and used much of the proceeds to pay down debt.

Australia

The ASX 200 edged higher on Monday even though oil prices and global bond yields rose after Trump rejected Iran's latest proposal to reopen the Strait of Hormuz. Six of the 11 sectors finished in positive territory. The major banks gained 1.1% ahead of Tuesday's RBA meeting, where markets are fully pricing in a hike to 4.60%, and investors are weighing the short-term boost to margins. Financials rose 1.2% overall, and insurers added 1.2%, led by Suncorp (+2.7%) on growing speculation that Tokio Marine is interested in a bid. Pinnacle Investment fell 2.0% after Metrics funds were suspended and revalued lower following an audit. Metrics is estimated to make up about 11% of Pinnacle's FY27 profit.

Materials fell 1.3% as commodity prices weakened to start the week, pulling down BHP (-1.5%), Rio Tinto (-1.1%) and Fortescue (-0.7%). Gold miners lost 1.4% as bullion fell 0.5% to US$4,220/oz during Asian trade, pressured by higher yields and the prospect of further Fed hikes. Northern Star was the exception, jumping 6.2% after rejecting a non-binding indicative offer from Gold Fields that implied $27 a share. Takeover news also moved other stocks. Ingenia Communities rose 5.8% after Warburg Pincus raised its non-binding indicative offer to $5.25 from $5.05, and the board is now assessing it. Cleanaway slipped 0.4% after saying EQT is continuing confirmatory due diligence and remains committed to the deal. Health care was the best sector, up 1.5%, helped by another strong session for CSL (+2.8%). Energy fell 0.2%, dragged down by Karoon (-12.9%), which cut its 2026 production guidance by about 10% to 6.6–7.2 million barrels of oil equivalent after an electrical fault.

Trading volumes were moderate. Australian bond yields rose 3–5 basis points across the curve, and the Australian dollar held near two-month lows at around US$0.7017. In Asian trade, WTI crude rose 1.9%, and Dalian iron ore fell 1.1%.

Australia has a busy week ahead. In addition to the RBA decision, August data are due on household spending, CPI, private credit, building approvals, trade, and job vacancies. Economists expect a hawkish hike that leaves open the option of another move in November, and they do not expect a first rate cut before November 2027.

In the US, PCE inflation (the Fed's preferred inflation measure) and payrolls data are both due. Several voting Fed members, who have mostly sounded hawkish since the recent hike, are also scheduled to speak. Elsewhere, China releases its PMIs, and Japan publishes CPI.

Comments from our readers

No comments yet