Stimulus trumps rise in infections

Key points

• Equities continued to bounce back with the S&P/NZX 50 Index returning 5.3%, S&P/ASX 200 Index (in AUD) up 2.6% and the MSCI ACWI Index up 3.0%.
• US employment growth has continued to surprise to the upside, with the improving economic data providing a stark contrast to the worsening Covid case numbers.
• Global Covid-19 containment measures have eased in aggregate, allowing a partial recovery in economic activity. The average lockdown stringency for the world’s 10 largest economies, based on the Oxford University measure, reduced to 60 from 70 in May (where 100 is equivalent to alert level four and 0 is no restrictions).
• In New Zealand, higher frequency economic indicators are showing a sharp recovery in many sectors.

Key developments

Performance of the equity market was in direct contrast to the news on the global spread of Covid-19, highlighting the preparedness of equity investors to look through the crisis and anticipate recovery.

New Zealand bond yields drifted lower over the quarter, though were flat throughout June.

Global policy makers continue to provide stimulus, with a focus on providing household and business support to bridge the crisis.