Devon Funds Morning Note - 18 March 2026

Friday 20th March 2026

Elevated Sentiment

Global

Risk appetite has remained elevated in global equities, with the US and Europe continuing to trade higher overnight. The Iran conflict remains a key focus, however, market moves over the past day have been relatively muted as investors await further developments before committing to the next major shift in positioning. The S&P 500 is up 0.3%, paring a 0.8% intraday gain, while the Dow has added 0.1%, and the Nasdaq has gained 0.5%.

NATO allies have so far refused President Trump’s request to send naval forces to help reopen the Strait of Hormuz, with France and Greece among those publicly ruling out participation, prompting Trump to call their stance a “foolish mistake” later adding “I’ve long said I wonder whether or not NATO would ever be there for us” … “This was a great test because we don’t need them, but they should have been there.”

US diesel prices have jumped back above $5 a gallon at the pumps for the first time since December 2022. A survey cited by CNBC suggests most economists think that if oil stays around current elevated levels for an extended period, it could add roughly 0.5 percentage points to headline CPI, complicating the Fed’s path to cutting rates. WTI and Brent Crude gained 2.5% and 3.0%, respectively.

American Airlines has stated they may need to raise liquidity if fuel prices remain elevated, underscoring that refined products are a bigger problem than crude given the lack of strategic reserves. Despite this, the US Airlines Index jumped 4.5% as stronger bookings rolled in, with travellers rushing to lock in flights ahead of expected fare hikes.

Elsewhere, Uber increased 5.0% after announcing a partnership with Nvidia to deploy self-driving taxis in Los Angeles and San Francisco from 2027. In the same space, Lyft gained 3.7% on plans to use Nvidia’s AI technology to improve its predictive modelling and ride efficiency.

Eli Lilly & Co. shares dipped 6.0% after HSBC turned bearish, cutting its position and slashing its price target to $850 (currently US $930.35) on the view that expectations for obesity and weight loss drugs have become overhyped. The bank now projects global obesity drug sales of 80–120 billion dollars by 2032, well below Wall Street’s consensus of more than 150 billion dollars.

New Zealand

Back home, the NZX 50 eked out a small gain, bouncing back 0.1% to break a three-day losing streak as improved sentiment extended to our domestic market. Key movers on the day include Chorus (+2.0%), Seeka Limited (+1.9%), and Meridian Energy (+1.7%).

The Commerce Commission has released a statement of issues on Astra Energy Group’s proposed purchase of GNZ Holdco (owner of Gull) and NPD Group Investments, which would merge two of New Zealand’s major independent discount fuel chains into a single Astra-owned network of more than 240 service stations nationwide. The Commission will now test whether combining Gull and NPD could substantially lessen competition in any local or national fuel markets, with particular focus on price impacts, the loss of rivalry between the two low-cost brands, and the extent of competitive pressure from larger players like Z Energy, BP, and Mobil.

The Global Dairy Trade Index delivered a modest 0.1% lift in overall prices, with a clear split between stronger fats and weaker powders. Skim milk powder and anhydrous milk fat both posted solid gains, up 5.2% and 6.4% respectively, while cheddar was essentially flat, nudging just 0.1% higher. In contrast, whole milk powder fell 4.0%, and butter slipped 0.9%

Stats NZ reported that annual food price inflation remains elevated in New Zealand, with prices up 4.5% annually in the year to February, largely reflecting broad-based increases across meat, poultry and fish (+7.5%), as well as fruit and vegetables, which increased 9.4% annually. The biggest increase, however, was the average price for beef mince, now $24.46 per kg – up 23.2% annually.

Australia

Across the Tasman, Australian equities closed modestly higher with the ASX 200 up around 0.2% as investors digested the RBA’s latest rate hike and guidance. Rate sensitive real estate and financials helped lead the recovery, while resource stocks were more mixed amid ongoing commodity price moves and China growth concerns.

The RBA hiked the official cash rate by 25bps to 4.10% in a surprise 5-4 split vote. Initially, markets read the decision as dovish, but RBA Governor Michelle Bullock later clarified that the split vote was about when to raise rates, not whether a hike was needed. Her comments were taken as hawkish, as she repeatedly stressed that inflation remains too high and highlighted the board’s concerns about second-round effects from higher energy costs linked to the Middle East conflict. Investors now judge it more likely than not that the RBA will deliver a third straight rate increase at its May meeting.

The initial dip in AUD after the decision was short lived, with the currency rebounding during the press conference and extending gains overnight to trade above 0.71. The NZD briefly dropped below 0.5820 following the announcement before recovering to around 0.5865, leaving it slightly higher than 24 hours earlier. By contrast, NZD/AUD slid to just above 0.8230 – its lowest level since 2013 – and now sits near 0.8250.

In the equity sectors, Materials rallied with gold names continuing to benefit from a higher spot price. In the space, West Africa Res Ltd rallied 5.8% on a strong FY25 result, while the heavy miners Rio Tinto and BHP contributed to the sector's outperformance.

Rate-sensitive Consumer Discretionary (-1.1%) felt the biggest hit from the hike, with the likes of Temple & Webster (-7.8%), Aristocrat Leisure (-2.0%), and Lovisa (-1.0%) all sliding around the time of the announcement. Tech also lagged, while Energy names eased as traders locked in profits after the recent Iran-driven oil rally.

Elsewhere, Electric Optic Systems collapsed 17.0% after the CEO and CFO moved to exercise deep in the money long term incentive options and signalled plans to sell most of the resulting shares. Pepper Money sank 14.9% after Challenger Limited cut its takeover bid to $2.25 per share.

Comments from our readers

No comments yet