Equity markets recorded solid gains last week with indices in the US reaching new all-time highs as the market volatility from last week slowly abated. Despite a Friday sell-off, the Dow, S&P 500 and NASDAQ all finished the week up more than 3%. In New Zealand, the NZX 50 eked out small gains too, thanks to a strong session on Friday.

As volatility fell, bond yields moved higher, with the US 10-year government bond ending the week up around 6 basis points.

What’s happening in markets

The threat of the coronavirus, which has now claimed more than 800 lives and infected more than 30,000 people, was seemingly overlooked by investors who were buoyed by the news China was cutting US$75 billion of tariffs on US goods from 10% to 5%, beginning 14 February.

In a translated statement from the Chinese Ministry of Finance, the move was “in order to promote the healthy and stable development of Sino-U.S. economic and trade relations.”

Meanwhile, the US labour market continues to shine, adding 225,000 jobs in January, well above market consensus.

Elsewhere in the US, the Senate, as expected, acquitted President Donald Trump on impeachment charges of abuse of power and obstruction of Congress. Meanwhile, in Iowa, after some technical glitches, results showed a neck-and-neck battle between Bernie Sanders and Pete Buttigieg.

Corporate earnings continued to trickle in with Alphabet – the parent company of Google – reporting worse-than-expected revenue numbers, which saw the stock price sink around 5% late Monday.

In central bank news, the RBA left interest rates unchanged with Governor Philip Lowe remaining relatively upbeat, despite the recent wildfires.

“There have been signs that the slowdown in global growth that started in 2018 is coming to an end. Global growth is expected to be a little stronger this year and next than it was last year and inflation remains low almost everywhere.” – RBA Governor Philip Lowe

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