New Zealand and Australian stock markets could be in for more volatility as concerns rise about another Covid-19 outbreak in China.
According to AAP, Beijing has locked down 11 residential communities near a wholesale food market after 45 workers tested positive to COVID-19.
The market will also have an eye on Wall St, where US stocks took their biggest plunge in three months last Thursday, the S&P-500 falling nearly 6 per cent.
New Zealand’s sharemarket followed suit, dropping 2.23 per cent on Friday, but opening up 1.23 per cent to reflect a late rally on Wall St after the New Zealand market closed on Friday night.
By mid-afternoon on Monday, the NZX top-50 was up 40 points, or 0.37 per cent, at 10,946.
Wall St’s rollercoaster ride reflected a growing realisation that economic recovery would not be as swift as investors hoped. Optimism about the reopening of the US economy has come up against a rising number of coronavirus infections.
“This is a battle of optimism and realism that’s been playing out over the last three months,” Adam Taback, chief investment officer for Wells Fargo Private Wealth Management told AP.
“Optimism was winning over realism with a look toward 2021. What [chairman of the US Federal Reserve] Jerome Powell exposed is 2021 is not enough time. It’s likely 2022 or even 2023 before we will see ourselves get back to normal.”
Despite the jittery sentiment, the S&P-500 managed to claw back some losses on Friday, ending up 1.3 per cent higher, although it was nearly 5 per cent lower for the week.
The Dow also closed higher, up 1.9 per cent, and the tech-heavy Nasdaq closed up 1 per cent, elevated by Amazon, Facebook, Apple and Google.
– with assistance from AP
