Devon Funds Morning Note - 16 September 2025

Wednesday 17th September 2025

Tech Triumphs, ANZ Pays Up, Down Under Drags

Global

Wall Street had a positive day with the S&P 500 gaining 0.5% to close at 6,615 and the Nasdaq up 0.94% to 22,348. The move was driven by broad tech sector strength, including Tesla (+3.56%) after CEO Elon Musk’s major insider purchase, and Amazon (+1.44%), which benefited from renewed optimism over AI product launches and fresh broker upgrades.

Investors also digested reports of progress on US-China negotiations regarding TikTok and watched for signals ahead of this week’s Federal Reserve policy decision. US bond yields edged lower as money markets priced in a higher chance of a rate cut. The Dow Jones eked out a smaller 0.1% rise, closing at 45,883, held back by a dip in Nvidia.

European markets strengthened, with the Euro Stoxx 50 finishing up 0.92% at 5,440 as investors rotated back into regional blue chips following better-than-expected earnings and improvement in French and Southern European industrial data. Financials, consumer cyclicals, and tech names led the rebound, while sentiment was bolstered by renewed optimism for Eurozone growth and stabilising inflation signals. The FTSE 100 in London finished down -0.1% to close 9,277, with gains in energy and defensive stocks offset by weakness in banks and exporters, as traders remained cautious ahead of the upcoming Bank of England policy announcement.

In Asia, Japan’s Nikkei 225 advanced 0.9% to 44,768, led by renewed exporter buying with continued yen stability and stimulus expectations. The Hang Seng Index in Hong Kong gained 0.2% to 26,446, with renewed buying in financials and technology shares following upbeat sentiment on upcoming Chinese stimulus and stabilisation in the local property sector. Gains were capped by caution around regulatory developments and volatility in mainland pharmaceuticals.

New Zealand

The S&P/NZX 50 declined 0.2% to 13,208. Fisher & Paykel Healthcare pulled back -0.8%, and Turners Automotive dropped -1.1%. ANZ lost 0.2%, while Westpac gained 0.9%. The gentailers posted mild declines with Mercury, Meridian and Contact retreating 0.4%,1.0%, and 0.87%, respectively.

Contact reported August operating stats, suggesting strong earnings for the month. Reflecting higher geothermal and hydro volumes, firm retail and C&I netbacks, and lower generation costs.

Auckland International Airport (+1.03%) reported August traffic showed passenger movements were up 3% year-on-year. Excluding transits, international passenger movements increased by 2% year-on-year while domestic passenger movements increased by 6%.

Looking at the economy, Farmer confidence in New Zealand has inched higher according to the most recent Rabobank Rural Confidence Survey, reaching its second highest level at any point over the last decade. The September results show 51% of farmers expect the agri-economy to improve over the coming year (up from 48% last quarter), with only 5% expecting deterioration. The net confidence reading now sits at +46%, driven largely by sustained high commodity prices for dairy, beef, and lamb.

The BNZ released Business New Zealand Performance of Services data, which fell by 1.4 points to 47.5 in August, marking the 18th consecutive month of contraction in New Zealand’s services sector. This latest decline puts the PSI well below its historical average of 52.9, with sub-indices for activity/sales (46.2), new orders/business (47.8), and employment (48.3) all remaining in contraction.

Negative comments were dominated by concerns about slowing seasonal demand, rising operating costs, supply chain disruptions, and policy uncertainty. BNZ’s senior economist Doug Steel warned that, although some indicators suggest a potential turning point for the economy, any recovery in services could be slower than anticipated, reflecting a tough environment for operators in the sector.

Australia

The S&P/ASX 200 fell 0.1% to finish at 8,853. Heavyweights BHP (-0.56%) and Rio Tinto (-0.11%) extended losses as iron ore retreated further, pressured by ongoing caution over Chinese steel demand and high port inventories. ANZ lagged (-0.6%) while NAB (+0.6%) edged higher.

ANZ has announced settlement with the Australian Securities and Investments Commission (ASIC) in relation to four non-financial risk management matters that were subject to regulatory investigations over a year for a penalty of $240m. The largest penalty of $85 million related to ANZ’s duration management in a 2023 government bond issuance where ANZ’s trading behaviour cost the government an estimated $26 million in additional funding costs. Other significant fines addressed breaches affecting over 65,000 retail customers. ASIC Chair Joe Longo described the outcome as reflecting “an unacceptable disregard for trust” and highlighted serious deficiencies in ANZ’s risk and compliance culture.

ANZ Chairman Paul O’Sullivan stated the bank holds executives accountable and is committed to urgent remedial action, acknowledging the “significant impact on customers” and pledging improvement in non-financial risk management.

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