Local GDP growth has come in stronger than expected, the NZX is back at record highs and Wall Street is also on the rise. So what happened to the big January panic which had US commentators warning of bear markets and new recessions? Why have things stabilised so fast?

The recovery in oil prices is a big part of the story, JBWere strategist Bernard Doyle has told The Economy Hub news show.

Oil prices have come back from lows of around US$30 a barrel in January to US$40.

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A falling oil price created a risk in US credit markets, particularly for borrowers in the energy sector. With the credit crunch and global financial crisis still fresh in the minds of many investors this prompted a strong reaction on markets.

Since then there has been a run of positive US economic data.

We were even starting to see inflation make a comeback in the US, Doyle said - something that will no doubt hearten our Reserve Bank which is struggling to lift inflation from near deflationary lows at 0.1 per cent. US inflation is now back to around 2 per cent a year.

The turnaround has eased market fears but hasn't been enough stop the US Federal Reserve taking a cautious approach and pulling back on its track for rate hikes in its latest announcement.

EY tax partner Aaron Quintal said he was picking up some quiet confidence from clients but risks remained about the global economy, particularly out of Europe. Many big global firms were still looking to remove costs from their businesses, he said.

If I was an investor with a lot of funds in in the New Zealand market I would be dampening down my future return expectations.

Big risks also remain about the sustainability of the oil rally, with global inventories still rising, and China remained volatile.

However, even the Chinese economy has been relatively stable in the past few weeks.

The market there had stabilised but was still effectively bumping along the bottom, Doyle said.

There were some signs that the rebalancing of the economy there was working. Also the big concerns about capital outflows - money flowing out of China into global investment markets - seemed to be easing as new Government rules started to bite, he said.

As far as the market here was concerned, there was no reason to think the NZX was headed for a big fall, Doyle said.

But with headwinds like the dairy downturn coming and many companies now trading at multiples of 20 times earnings there was a lot of good news already priced in.

"If I was an investor with a lot of funds in the New Zealand market I would be dampening down my future return expectations."