Beating expectations

Key points

• Equities continued to bounce back with the S&P/NZX 50 returning 3.3%, S&P/ASX 200 (in AUD) up 4.4% and the MSCI ACWI Index up 4.1%.
• Government bond yields settled in a low range, as the Reserve Bank’s bond buying (QE) programme offset the pressure that would otherwise have come from increased issuance.
• Australian and New Zealand earnings season so far, on balance, has delivered more upside than downside surprises relative to expectations. 
• Budget 2020 in New Zealand overwhelmed on spending but underwhelmed on detail.

Key developments

Recent economic data, when taken in aggregate, has also surprised to the upside. China’s services sector confidence (Caixin PMI), came in at 55 versus an expected contraction of 47.6, which buoyed markets.

US employment data also came in better than expected, showing two and a half million jobs added versus an expected eight million additional unemployed.

Markets have continued to be reassured by global policy makers, who continue to deliver stimulus and remain open to providing additional help.