Devon Funds Morning Note - 09 September 2026

Wednesday 9th September 2026

Two Fronts, One Oil Spike

Global

The US-Iran standoff saw little material change over the past 24 hours, though claims and countermeasures kept piling up. Tehran said it seized a US unmanned underwater vehicle, a claim the US has not confirmed, consistent with the pattern of contested claims from both sides this month. A missile was also launched from Sirik toward the Strait of Hormuz on September 8, with no reported target or casualties. The US Treasury opened a new sanctions front, designating 36 individuals and entities it says support Iran's aviation sector, separate from the tanker and shadow-fleet sanctions already running under Operation Economic Outcast.

The Red Sea conflict also escalated materially, though with less coverage. Saudi Arabia threatened retaliation after the Houthis launched their heaviest attack in years, striking Abha International Airport, King Khalid air base and Aramco facilities in Abha and Jizan, causing temporary shutdowns at oil sites and injuring 73 people. The attacks followed Houthi accusations that Riyadh had struck a prison, killing 11 and leaving 20 inmates missing. Hundreds have reportedly died in recent clashes around Bab al-Mandab, with Saudi Arabia vowing to "take all necessary measures to defend its sovereignty." Both Iran and the Houthis appear to be deliberately raising tension ahead of the US midterms on November 3, with neither side yet blinking.

Energy prices jumped on the escalation: WTI rose 3% to ~US$94.20/bbl and Brent gained 2.3% to ~US$99.20/bbl. Asia Pacific refining margins rose 2.9% to ~US$50/bbl (Valero +3.3%, Phillips 66 +1.6%), while Singapore jet fuel eased 1.8% to ~US$160/bbl.

On US data, NFIB small business optimism slipped to 98.7 from 99.8 in August on weak sales and inflation concerns, while NY Fed 1-year inflation expectations held at 3.6% and 12-month unemployment expectations hit their highest since April 2020. Consumer borrowing rose more than expected in July, with the largest advance in non-revolving credit in three years. We can expect August core CPI on Friday night and the FOMC decision Thursday morning, with markets pricing roughly 65% odds of a rate hike.

US equities fell on the higher oil price and broader risk-off tone, with the S&P 500 down 0.6%, Nasdaq down 0.3% and Russell down 0.5%. Metals rose 3.5% and Philly Semis gained 1.3%, while Software fell 1.8%, Cyclicals dropped 1.6% and gold miners (BUGS) eased 1%.

New Zealand

The NZX 50 fell 0.6% in a cool start to spring trading, with 48 stocks declining against 31 gainers, leaving the index up just 0.3% over five days and down 0.2% for the month, though still ahead 5.8% over six months and 4.4% year-on-year.

KMD Brands was the standout performer, jumping 4% on the day after Street Talk reported the founder of surf and streetwear brand Ghanda Clothing has emerged as a 6.2% shareholder, sparking speculation about the stake's intent even though the stock remains down 48% over six months and 55% over the past year. Precinct Properties also rose 2%, while SkyCity Entertainment and Sky Network Television each added 1%. On the downside, Ryman Healthcare and Gentrack both fell 3%, and Napier Port and Vulcan Steel each eased 2%.

In the rental market, Realestate.co.nz reported 7,257 new rental listings in August, the most in any month since it began collecting data in January 2016, up 8% on August 2025 and 26% on August 2024, a sign that rental supply continues to build even as broader housing indicators remain mixed.

In the primary sector, Beef + Lamb New Zealand's New Season Outlook forecast average farm profit of $267,000 for 2026-27, down from a record $335,000 last season but still comfortably above five-year averages, pointing to a moderation rather than a reversal in the strong run of rural earnings that has underpinned recent consumer and rural spending trends.

Australia

The S&P/ASX 200 fell 1% to close at a six-week low of 8,920, with 10 of 11 sectors in the red. Financials led the declines, down 1.9%, alongside Technology (-2%), REITs (-1.7%) and Consumer Discretionary (-1.6%), while Utilities was the lone gainer, up 0.5%. Energy was a rare bright spot within the broader selloff, with Ampol and Santos both posting gains as crude oil extended a rally that has seen prices climb roughly 20% over the past month on escalating Middle East tensions.

The banking-led weakness came alongside a shift in rate expectations: Westpac became the last of the major banks to change its call, now forecasting the RBA will lift the cash rate to 4.6% in November, with chief economist Luci Ellis citing a more resilient household sector and surging data centre investment as key drivers. That repricing added to pressure on rate-sensitive sectors. Domestic data reinforced the more cautious tone: the NAB monthly business survey showed confidence falling 2 points to -8 and conditions down 5 points to -1, the first negative conditions reading in six years, with profitability at post-COVID lows. The Westpac-Melbourne Institute consumer sentiment index fell 5% to 84.4, largely reversing last month's gain, with mortgage holders' sentiment down a sharp 13% versus just a 1% fall for renters.

In M&A news, Street Talk reported Brookfield is pushing ahead with its pursuit of Colonial First State, with a potential deal now pitched to its investment committee. Separately, The Australian reported ExxonMobil's sale of its New Zealand business has been delayed by a week, with HW Richardson Group and Waitomo Group expected to compete strongly for its 150-station network, Channel Infrastructure eyeing the terminals, and KKR, Carlyle, Allegro and Viva Energy also circling.

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