NZX and dollar climb after no new coronavirus cases reported

Monday, 4 May 2020

The NZX was 0.4 per cent down at 3pm after regaining most of its morning losses.

The sharemarket and the kiwi dollar appear to have had a small boost from news that New Zealand did not have any new cases of Covid-19 to report on Monday for the first time in seven weeks.

The NZX top-50 index had been down 150 points, or 1.4 per cent, at 10,300 prior to the 1pm announcement.

But the index regained 100 points within two hours of the statement from director-general of health Dr Ashley Bloomfield.

The New Zealand dollar also turned around on the announcement, gaining a modest 0.16 US cents by 3pm, after drifting down to US60.14c in pre-lunch-time trading.

The kiwi also made a similarly-modest gain of 0.16 Euro cents gain against the Euro.

There are some positive signs from car dealers that the blow to consumer confidence may not be as deep as feared.

* Coronavirus: Two new cases of Covid-19, no new deaths

Credit ratings agency Standard and Poor's subsequently reaffirmed its positive long-term outlook on New Zealand's 'AA/A-1+' foreign currency and 'AA+/A-1+' local-currency sovereign credit ratings.

S&P said the Covid-19 outbreak had pushed New Zealand's economy into recession and that 'headwinds' and uncertainties remained.

It also forecast property prices would fall by about 10 per cent in the year ahead as unemployment rose and migration slowed because of travel restrictions.

But it said New Zealand's monetary flexibility, 'wealthy economy', and institutions were conducive to 'swift and decisive policy actions and support the ratings positive trajectory'.

'The positive outlook reflects New Zealand's strong fundamentals and that its fiscal profile should strengthen after the Covid-19 outbreak subsides,' it said.

Automotive technology business AutoPlay said data from car dealers suggested consumer spending could bounce back faster than feared as the country approached what could be its last week of level 3 lockdown.

Business development director Mike Pratt said its software systems captured the majority of inquiries that consumers to made car dealers either online or by phone.

Its data showed that, from last Wednesday, those lead inquiries had returned to about 70 per cent of pre-Covid-19 levels.

Between Thursday and Sunday about 30 to 40 per cent of the normal volume of test drives took place, despite dealers having to enforce social distancing rules.

“Although it’s far too early to make a call on the trajectory of customer inquiries going forward, it’s great to see the number of customer leads hitting dealerships despite such strong operating restrictions still in place,' Pratt said.

'The positive trend in these figures indicates a bounce for the New Zealand economy could be on the horizon, as new vehicle sales are widely regarded as an indicator of consumer confidence.'