What happened
COVID19 vaccinations continued to be rolled out globally at a pace of over 30
million per day, and nearly 2 billion doses were administered by the end of May.
During the month the Labour government in New Zealand released their budget for 2021, which included increased social welfare benefits. This was seen as a marginal positive for the economy by many local economists due to the higher propensity to spend of beneficiaries. The announcement had a muted impact on the New Zealand share market, however.
Bond yields continued to rise in New Zealand, even as the Reserve Bank of New Zealand left the official cash rate (OCR) unchanged at 0.25% during the month. In other parts of the world yields declined slightly, namely in the US, amidst the release of mixed economic data, including an unexpected rise in the unemployment rate. Wealthpoint Market Update June 2021 US inflation was higher than expected, which triggered a spike in rates and decline in the share market on the day of the release. However, these shocks reverted by the end of the month. Nevertheless, large technology stocks that performed well in 2020 continued their recent underperformance. Later in the month, the release of the minutes from the US Federal Reserve (Fed) meeting in April revealed that tapering of asset purchases may be up for discussion at future meetings if the economy continued to make rapid progress. This was the first public hint that the Fed is considering tighter monetary policy since the market sell off and lockdowns related to the COVID 19 pandemic. Commodities rose over the month on the back of higher expected demand. In contrast, speculative digital assets such as bitcoin declined significantly.
The sell-off of A2 Milk (ATM) intensified during the month after a further downward
revision of forecast sales and the resignation of the Chief Executive Officer for Asia
Pacific. Fisher & Paykel Healthcare (FPH) released a record profit in their 2021
annual report, however, although a forecast for 2022 was not disclosed, there was
talk of reduced global respiratory hospitalisations because of the vaccines, which
investors saw as a negative for the stock.
Infratil
(IFT) and Mainfreight (MFT) shares rose over the month, supported by the
release of their annual results to the end of March 2021.