Markets cool on Covid-19 fears

Fresh nervousness is expected on financial markets this week amid the re-emergence of coronavirus cases in New Zealand and strong growth in case numbers overseas.

ASB noted in a weekly bulletin yesterday that the number of new daily diagnoses in the United Sates had risen above 30,000 cases for the first time since May 1.

Westpac also indicated that the growth in Covid cases overseas could set the tone for financial markets, saying the rise in Covid cases in the US was a ‘‘key concern’’.

Covid tracker Worldometer reported the two highest daily tallies of new global infections on Saturday and Sunday, with a record 180,874 cases on Saturday.

New daily deaths have been edging up, but at a slow pace, and are hovering at 4000 to 5000.

The S&P Futures Index closed down 1.3 per cent at 3058 on Saturday, New Zealand time, setting the scene for a possible drop in US sharemarkets overnight.

That appeared reflected in early trading on the NZX yesterday, with the NZX50 down 67 points, or 0.6 per cent, shortly before noon.

Mounting evidence that the quarantining and managed selfisolation of travellers coming into New Zealand had been poorly managed appeared to keep the NZX and the New Zealand dollar in check late last week.

The border botches complicated a picture painted by Treasury secretary Caralee Mcliesh on Thursday of a stronger-than-expected bounce in domestic economic activity flowing into a potentially slower recovery because of overseas events.

The Reserve Bank will make its next scheduled announcement on the official cash rate tomorrow afternoon. But governor Adrian Orr has already given the central bank’s word to keep the OCR unchanged at 0.25 per cent until March next year.

That means the focus tomorrow is likely to be on any comments the bank makes about the state of the economy and the potential for any change in its $60 billion programme of quantitative easing.

The National Institute for Economic Research think tank said there was a wide range of views among expects it consulted on whether more monetary policy stimulus was required, and in what form.

‘‘Overall, the consensus. . . is that more stimulus would be required over the next 12 months, with the majority favouring an expansion of the Reserve Bank’s quantitative easing programme.’’

There was little support among experts on its ‘‘shadow board’’ for an immediate cut to the OCR, though it said some thought that would be required ‘‘over the coming year’’.

ANZ said last week that it expected the Reserve Bank to expand its quantitative easing programme cap to $90b in August.