Devon Funds Morning Note - 31 August 2026

Monday 31st August 2026

Warsh Draws the Line

Global

Fed Chair Kevin Warsh delivered a hawkish message at Jackson Hole, saying inflation is not meaningfully slowing and that policymakers must be confident it is moving to the 2% goal "clearly and at sufficient speed," or "we have work to do." He acknowledged summer PCE and CPI readings were better than expected but said they don't show underlying trends have genuinely improved, adding he'd be "hard pressed to describe broad financial conditions as restrictive" and that rates remain the Fed's "predominant tool." Warsh was careful to dispel speculation he intended to alter the Fed's inflation target, calling the 2% PCE goal a "firm, fixed target," while framing his approach as "committed to a discipline, not to a decision" and warning against a regime where markets look to the Fed for their next trade. Markets read the hawkish tone clearly: the 2-year yield rose 11bps and the 10-year rose 4bps, with pricing now implying roughly 60% odds of a rate hike at the September 16 meeting, rising to about 90% by October, and markets are back to pricing a second hike next year.

On Iran, little changed. Bessent has yet to sanction the major financial institution he flagged last Monday, and Trump continued to claim on Truth Social that Iran is "begging to make a deal," criticizing a Fox News report he called inaccurate. Iran's top diplomat offered a modest opening, saying resuming diplomacy with the US "isn't impossible" following "creative discussions" with Qatar, though the IRGC's stance remains the more relevant signal.

Energy prices were little changed: WTI eased 0.2% to ~US$83.40/bbl and Brent slipped 0.4% to ~US$89.30/bbl. Asia Pacific refining margins rose 6% to ~US$45/bbl after a Ukrainian drone strike started a fire at Russia's 400,000 bpd Kirishi refinery, just weeks after it resumed operations from earlier repairs. Singapore jet fuel rose 2.6% to US$148/bbl.

The bigger structural story was a reported US deal to secure access to Venezuela's oil reserves. Acting President Delcy Rodriguez agreed to hand over rights to more than 65 billion barrels of proven reserves, which Trump called "the biggest oil deal in world history," claiming it more than doubles US oil reserves, will lower gas prices, and will help refill the Strategic Petroleum Reserve. Rodriguez defended the deal as bringing prosperity and jobs to Venezuela, along with roughly US$19/bbl in profit per barrel produced, though the arrangement is reportedly generating unease among Venezuelan politicians, and comes as Venezuela also weighs exiting OPEC.

New Zealand

The NZX 50 fell 0.8% to close the week at 13,768.18, capping its steepest weekly decline since mid-May at 1.5%, as several earnings-day reactions weighed on the index. Serko led weekly losses (-9%), followed by Air New Zealand at record lows (-7.2%), Chorus (-6.7%), Meridian Energy (-6.3%) and Ebos Group (-6.1%), while SkyCity Entertainment (+11%) and Summerset Group (+9.9%) were the standout gainers for the week.

Earnings dominated the session. Hallenstein Glasson posted the biggest daily gain, up 8.4%, after confirming FY26 sales of $563m (+20%, +16% cc) and guiding to NPAT of $83.0-84.5m, up roughly 44%. Channel Infrastructure rallied 6.9% after lifting FY EBITDA guidance to $103-108m from $97-105m on the back of 1H NPAT of $18.2m (up from $11.6m), alongside a new 15-year bp fuel storage contract at Marsden Point worth an estimated $130m in revenue over its first 15 years. Comvita rose almost 4% after swinging to an operating profit of $14m (from a $29m loss) on revenue up 11% to $213m. Michael Hill reported FY26 revenue up 2% to $656m, resumed dividends with a 2cps final, and flagged same-store sales up 4% in the first eight weeks of FY27. Synlait guided to underlying EBITDA of $36-41m and an underlying NPAT loss of $19-24m for the year to July. TVNZ posted an $18.7m underlying NPAT loss as advertising revenue fell 8%, partly offset by 17% growth in digital revenue.

On the macro side, ANZ-Roy Morgan consumer confidence eased 1 point to 98.0, still 18 points above its April low, though the share of households seeing it as a good time to buy a major item fell 5 points to -12, with 2-year inflation expectations little changed at 4.7%.

Australia

The S&P/ASX 200 rose 0.60% (54.1 points) to close at 9,092.3, with Information Technology, Metals & Mining and Resources leading gains even as decliners narrowly outnumbered advancers 567 to 535. Xero added almost 5% and Objective Corp rose 5.35%, while Liontown Resources gained 5.24% and gold and lithium names such as Pantoro Gold and Vulcan Energy Resources also performed well. On the downside, PEXA Group tumbled 18% to an all-time low and Wam Capital fell almost 18% to a five-year low, while Tuas dropped 5%.

The Australian dollar was the standout macro story, surging to its highest level since May at US72.00 cents and hitting 36-year highs against the yen, as markets priced a 48% probability of an RBA rate hike at the late-September meeting. That repricing also pushed Australian 10-year government bond yields up to 5.09%, nearing 15-year highs, as elevated inflation and heavy AI-related tech infrastructure spending kept upward pressure on rates. Westpac added to the cautious tone, forecasting Q2 GDP growth of just 0.2% quarter-on-quarter and 1.7% annually, pointing to a still-soft underlying economy even as headline rate expectations firm.

In corporate news, MUFG announced plans to acquire superannuation administration provider Grow Inc, a deal that comes after HESTA's earlier transition difficulties in the sector. Corporate Travel Management came under fresh pressure after disclosing it would refund tens of millions of dollars in margins and rebates that should have been passed on to clients, reviving governance concerns around the business.

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