InvestNow News – 15th May – ANZ Investments – Weekly Snapshot
Global equity markets continued their resurgence last week, with indices in the US recording gains of between 2% and 6%, while down under the NZX 50 rose 2.3%. Tech stocks continued to outperform with the Nasdaq Composite trading into positive territory for the year.
After a volatile few months, bond yields have settled into relatively (by recent comparison) tight ranges, with the US 10-year government bond yield spending the past few weeks either side of 0.65%.
What’s happening in markets
Last week the focus was on employment data in the US that, to no one’s surprise, painted a pretty dire outlook for the US economy. Over the week, the following data was released:
- ADP private payrolls data showed 20.2 million private-sector jobs were lost in April
- Weekly jobless claims saw a further 3.2 million Americans file for unemployment benefits
- Nonfarm payrolls showed 20.5 million jobs were lost in April
- The unemployment rate rose to 14.7% (for context, two months ago it was at a 50-year low)
However, this failed to weigh on stock markets with equities in the US now more than 30% higher than their mid-March lows. The rally has been led by the large-cap stocks with Amazon, Apple and Microsoft all at or near record-highs. Each one of these companies has a market cap greater than US$1 trillion.
The unemployment report for New Zealand was released too, but given it’s a quarterly report, it didn’t encapsulate much of the coronavirus effect, with the unemployment ticking up to 4.2%, better than most had expected.
In the UK, the Bank of England left interest rates unchanged, however, it warned that the UK economy was set to contract by about 14% in 2020, which would be the worst since 1706.
The ‘risk-on’ tone has seen the New Zealand dollar post solid gains against the US dollar. For the week, the NZD rose 1.3%, trading towards 0.6150 and in-sight of a two-month high.