Market Open: Tepid Wall St may lead to light trading

It's likely to be a subdued day on the NZX as concerns continue abroad. Photo / File

Trading on the local share market may be tepid today after Wall Street took an overnight breather.

"It was a relatively consolidative day in markets following the sizeable swings of recent days and weeks," said ANZ Bank senior economist Liz Kendall.

Covid-19 worries continue to linger after a record spike in new cases was reported in several US states and authorities in Beijing have ramped up restrictions to contain a new outbreak, including cancelling inbound and outbound flights. However, some data pointed to a recovery.

US homebuilding increased less than expected in May, but a strong rebound in permits for future home construction suggested the housing market was starting to emerge from the covid-19 crisis, Reuters reported.

Housing starts rose 4.3 per cent to a seasonally adjusted annual rate of 974,000 units last month, the Commerce Department said.

Permits for future home construction rebounded 14.4 per cent to a rate of 1.22 million units in May "indicating an improving pipeline for starts in coming months," ANZ's Kendall said.

The New Zealand dollar was trading at 64.59 US cents at 8am in Wellington versus 64.44 cents at 5pm yesterday "after a reasonably calm night, with equities and risk assets trading tight ranges," said Kendall.

The Dow Jones Industrial Average was down 0.7 per cent at 8am in Wellington, the Nasdaq was up 0.2 per cent and the S&P 500 was down 0.4 per cent.

The second day of congressional testimony by Federal Reserve chairman Jerome Powell may also have dampened some enthusiasm.

Among other things, Powell said some form of unemployment insurance should continue past the expiration date of July 31. He also defended the central bank's more than US$2 trillion state of emergency funding to keep credit flowing during the pandemic, MarketWatch reported.

Meanwhile, New Zealand's first-quarter gross domestic product data today could create volatility, said Kendall.

However, estimates range from -2.7 per cent to +0.6 per cent and chances are that there will be "more noise than signal," given the data are now very old and that most of the covid-19 hit will have fallen in the second quarter.

- BusinessDesk