Live: World awaits Iran's reply to US strikes, Trump talks 'regime change'

The world is awaiting Iran's response after President Donald Trump said the US had "obliterated" Tehran's key nuclear sites, joining Israel in the biggest Western military action against the Islamic Republic since its 1979 revolution.
With the damage visible from space after 30,000-pound US
bunker-buster bombs
crashed into the mountain above Iran's Fordow nuclear site, Tehran vowed to defend itself at all costs.
Tehran has so far not followed through on its threats of retaliation against the United States - either by targeting US bases or trying to choke off global oil supplies.
- Reuters

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RNZ News

32 minutes ago

• RNZ News

Seymour warns rushing judgement on US airstrikes against Iran

The Acting Prime Minister is warning against rushing to judgment on the United States' airstrikes on Iran, saying the rest of the world is not waiting to hear New Zealand's position. David Seymour has stepped in for Christopher Luxon at this week's post-Cabinet press conference, and he was pushed for a response on the strikes. Mr Luxon is in Europe for the NATO summit this week, where the Middle East is likely to dominate proceedings. Political reporter Giles Dexter spoke to Lisa Owen. To embed this content on your own webpage, cut and paste the following: See terms of use.

Newsroom

38 minutes ago

• Newsroom

US attacks on Iran further unnerve already volatile markets

US President Donald Trump's decision over the weekend to join Israel in launching missile strikes on Iran creates yet another serious headwind for the global economy already dealing with the fallout from the recent imposition of tariffs on goods entering the US and rapidly weakening business and consumer confidence. Equity markets are expected to sell-off on the news given the increased geopolitical risks and a likely spike in the price of oil with the NZ sharemarket being the first to indicate the extent of the fall when it begins trading at 10am today. Politically, the decision to strike Iran marks a dramatic turning point in Trump's presidency after campaigning for his second term on a pledge to be a peacemaker who ends 'forever wars'. The decision to launch military action will result in a range of potentially dramatic outcomes for financial markets to consider including the possible blocking of the Strait of Hormuz by Iran through which about 20 percent of the world's oil passes each day, the risk of attacks on US ships and bases in the Middle East, not to mention the possibility for retaliatory terrorist attacks given the now elevated threat level. And then there are always the unforeseen consequences that result from these hasty military actions, including the potential for the destruction of the Fordow nuclear plant to permanently contaminate local water sources. But foremost on investors minds will be the impact on the all-important oil price. Brent crude oil closed on Friday at US$77 a barrel, a five-month high, up almost 4 percent for the week and a whopping 33 percent since early May when it fell to a low of US$58 a barrel. It's fair to say investors have been surprisingly complacent in recent weeks about the growing instability in the Middle East and the threat of Israel launching attacks on Iran. Expect petrol prices at the pump to respond rapidly this week to reflect the growing geopolitical turmoil putting further pressure on already stretched household budgets. And a continued spike in oil prices and their inflationary impact is just what central banks didn't want and haven't factored into their forecasts. Given slightly better-than-expected Q1 GDP data locally last week the combination will likely mean the RBNZ will opt to pause on a further cut in the OCR next month. The question now is how much could we see oil prices spike and, more importantly, how will Iran respond to the US attacks? Moreover, could this latest action potentially lead to a regime change with the additional risks that would entail for the price of oil? Historically, regime changes in major oil-producing countries such as Iran have had a significant impact on global oil prices, according to US investment banking group JPMorgan. In a recent note to clients it said further political destabilisation in Iran 'could lead to significantly higher oil prices sustained over extended periods'. There have been eight cases of regime change in major oil-producing countries since 1979, according to the bank. It noted oil prices spiked 76 percent on average at their peak in the wake of these changes, before pulling back to stabilise at a price about 30 percent higher compared with pre-crisis levels. It cited the example of oil prices nearly tripling from mid-1979 to mid-1980 after the Iranian revolution deposed the Shah and brought the Islamic Republic to power. That triggered a worldwide economic recession. More recently, the revolution in Libya that overthrew Muammar Gaddafi jolted oil prices from US$93 per barrel in January 2011 to US$130 per barrel by April that year. That price spike coincided with the European debt crisis and almost resulted in a global recession, according to the bank. However, regime change in Iran would have a much bigger impact on the global oil market than the 2011 revolution in Libya because it is a significantly bigger producer. If the market were to price in up to three million barrels a day going offline that would have a dramatic increase on oil prices, according to analysts. Moreover, if the regime in Iran believes it is facing an existential crisis, it could use its stockpile of short-range missiles to target energy facilities in the wider region and oil tankers in the Persian Gulf, Helima Croft, head of global commodity strategy at RBC Capital Markets, told business news network CNBC over the weekend. Tehran could also try to mine the Strait of Hormuz, the narrow body of water between Iran and Oman through which about 20 percent of the world's oil flows daily, Croft said. There are already reports that Iran is jamming ship transponders and impeding GPS services which will further interrupt the flow of shipping traffic with several government ministries already warning their vessels to avoid the strait as much as possible. In a worst-case scenario, oil prices could easily surge above US$100 per barrel if Iran fully mobilises to disrupt shipping in the strait, according to Bob McNally, a former energy advisor to President George W Bush. 'They could potentially disrupt shipping through Hormuz by a lot longer than the market thinks.' Shipping could be interrupted for weeks or months, McNally told CNBC, rather than the oil market's view that the United States Fifth Fleet, based in Bahrain, would resolve the situation in hours or days. 'It would not be a cakewalk,' McNally said. NZ corporate governance standards called into question While the US has its 'Magnificent Seven' stocks that have been responsible for powering the market ever higher, NZ has a collection of prominent listed companies that might be termed the 'Shabby Five' for having done the complete opposite, according to a new report. Highlighting multiple areas of weak corporate governance including a lack of strategic vision, poor capital allocation and insufficient self-reflection, the report from investment advisors Forsyth Barr should be compulsory reading for all directors serving on company boards. Focusing on five underperforming companies in particular – Fletcher Building, Ryman Healthcare, SkyCity Entertainment, The Warehouse Group and Synlait Milk – the report makes for depressing reading, while noting there were several other potential candidates that could also have been included in the mix, most notably Spark and Kathmandu. Though the combination of the Covid-19 pandemic followed by a painful recession have created challenging conditions for many businesses, the report notes several red flags that were evident along the way that should have acted as a warning for shareholders. And as the following table highlights, those shareholders in each of the five companies covered in the report have every reason to feel aggrieved after suffering a significant deterioration in the value of their investments in recent years. The report's lead author, Katie Beith, a corporate governance specialist, said a growing concern about the underperformance of a number of listed companies led to the commissioning of the report. And rather than seeking to lay blame, she said the intention was to highlight areas of weakness that needed to be improved and to learn from those experiences. 'My curiosity was initially sparked around examining the effectiveness of good corporate governance and working with our analysts to identify if there were common themes where things were going wrong that could be improved upon.' And on that point, the report indeed highlights multiple areas of weakness in the performance of each of the companies, which Beith says should act as an early warning sign for shareholders, most notably poor cash conversion and capital discipline. 'All of the five case studies showed weak financial discipline – overpaid dividends, rising debt, or growth spending without clear returns, often disconnected from the business cycle,' the report notes. In addition, financial restatements and impairments in all cases (with the exception of SkyCity) signalled overvaluations or misjudged expectations, while long-standing relationships with auditors were seen as reducing auditor independence or normalising incremental risk over time. But perhaps the most concerning finding was the fact three of the five companies – Fletcher Building, Ryman and Synlait – do not conduct annual board assessments, which are seen as an important element of supporting accountability and providing stronger governance. So does this suggest boards themselves should be subject to some form of audit with these findings included in annual reports? Beith believes it's something that should be considered, though perhaps without the need for a formal audit. 'I hope that's one of the evolutions that we would see from this report. Annual assessments foster accountability and identify areas of weakness for development. It also enhances decision making.' Though it is rarely straightforward to pinpoint a single cause when a company experiences a major share price decline, the report noted each of the five companies had faced serious challenges in recent years, many of which were self-inflicted. Fletcher Building dealt poorly with problems in its construction division with inadequate internal systems and a one-size-fits-all reporting structure that failed to reflect the complexity of what were 20+ separate and distinct business units. Additionally, a number of poor capital allocation decisions were made that did not reflect the cyclical nature of its business. 'Management shifted focus to growth before historical construction problems were fully addressed,' the report notes. Ryman Healthcare's debt was built to an unsustainable level culminating in two capital raises within two years. The company failed to take into consideration the impact falling property prices would have on its cashflow position as well as not taking into account the risks in relying on government funding when its cost base was not directly linked to it. Though SkyCity Entertainment has arguably suffered the most as a result of Covid and a dramatic falloff in visitor numbers, particularly from China, the report notes that it too experienced serious governance deficiencies given that it failed to anticipate and act on increased regulatory scrutiny both here and in Australia that has cost it dearly in terms of fines and its corporate reputation more broadly. Synlait Milk's primary challenge has been poor capital allocation – most notably the investment in its Pokeno facility which remains significantly loss making – and an over reliance on a single customer, a2 Milk, with the board appearing to be dismissive of the risks associated with a2s growth prospects leaving it heavily exposed. The report notes the company pursued an aggressive growth strategy based on a 'build it and they will come' rather than taking a more measured 'what if' approach that considered potential threats. When it comes to The Warehouse Group the report notes multiple missteps over more than two decades. These have included a failed expansion into Australia, a costly foray into consumer finance that was eventually shut down, a disastrous venture into sporting goods retailing resulting in a $60 million writedown of its investment in Torpedo 7, and the failure of its integrated online platform which it closed last year after failing to find a buyer. As the report notes, rather than consolidating and strengthening its competitive positions, WHS allocated significant capital toward multiple inorganic ventures most of which failed to deliver, ultimately undermining long-term shareholder value. Shareholders though also need to up their game, according to the report. As anyone who has attended company AGMs knows only too well, the standard of questions generally leaves a lot to be desired. Beith encourages shareholders not to shy away from asking the hard questions including asking about capital allocation decisions, fully explaining the rationale behind strategy and, perhaps most importantly, questioning how risk is being managed 'Don't settle for surface-level answers; probe for clarity on returns, accountability, and alignment with long-term value.' But perhaps the single most important question shareholders constantly need to be asking themselves: is the board demonstrating accountability and engagement? Poor communication with stakeholders – particularly during periods of underperformance – is a definite red flag. Coming up this week Tuesday • Credit Card Spending & Balances (May) – RBNZ • NZ Windfarms SSM Wednesday • Overseas Merchandise Trade (May) – Stats NZ Thursday • Serko AGM Friday • ANZ-Roy Morgan Consumer Confidence Survey • Residential Mortgage Lending (May) – RBNZ • ERoad AGM • Oceania Healthcare AGM

NZ Herald

an hour ago

• NZ Herald

NZX down 0.3% as world waits for Iranian response

The New Zealand sharemarket fell on Monday after the United States launched strikes on Iranian nuclear facilities over the long weekend. The benchmark S&P/NZX 50 Index dropped 0.29% to 12,532.65 points with 38 million shares worth $135.7m changing hands. On his Truth Social media platform, US President Donald Trump said