New Zealand's stock market may be in for a positive start to the week after Wall Street closed stronger on Friday on optimism over a late-stage trial of the Remdesivir drug in treating Covid-19.
Investor optimism over the economic recovery from the Covid-19 pandemic was stoked by drug company Gilead's news that its antiviral remdesivir product significantly aided the recovery of severely ill patients. Australia's Therapeutics Goods Administration gave provisional approval for remdesivir to be used in adults with severe Covid symptoms.
"Gilead's study, which compared the results of its 312 patients to a selection of 818 patients with similar characteristics in the 'real world,' is not seen to be as authoritative as a randomised controlled trial, but it boosted risk appetite nonetheless," Bank of New Zealand interest rates strategist Nick Smyth said in a note.
That overshadowed the growing number of new Covid cases in the US, which is almost at 3.4 million, followed by Brazil with 1.8 million and India at 879,000.
Wall Street rallied on Friday, with the Dow Jones Industrial Average up 1.4 percent, the S&P 500 Index rising 1.1 percent and the Nasdaq advancing 0.7 percent.
That tone will likely flow into the local market, with Australian S&P 200 futures up 95 points at 5,971.
Fisher & Paykel Healthcare has been a beneficiary of the pandemic, supplying components in respirators used across the US in treating Covid. That helped it become NZ's first $20 billion company earlier this year. The stock closed at $35.30 on Friday.
Other local healthcare stocks include Maxigesic-maker AFT Pharmaceuticals, healthcare products distributor Ebos Group, and primary healthcare and pharmacy chain Green Cross Health.
The S&P/NZX 50 Index fell 1.4 percent to 11,394.86 last week, with a sharp fall on Thursday when Rio Tinto announced plans to close the Tiwai Point aluminium smelter next year, removing the country's biggest electricity user and weighing heavily on the share prices of generator-retailers.
Meridian Energy and Contact Energy – which both have large South Island hydro assets – have been the most affected. Meridian's credit rating was placed on a negative outlook by ratings agency Standard & Poor's on Friday.
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Yesterday, the Green Party unveiled the first tranche of its energy policy, with would ban the use of all coal in NZ by 2030, immediately ban the installation of any new coal-fired plant within its first 100 days of government, and subsidise the installation of solar panels in privately-owned homes. The party will likely form part of the next administration on current polling, especially with the current turmoil in the opposition National Party.
Investors will also get the chance to further digest the late news on Friday that the majority of Metlifecare's board will recommend a new takeover offer by EQT Group's Asia Pacific Villages Group at $6 per share. That's down from the original $7 offer that the Swedish firm then tried to back out of, but has the backing of the retirement village operator's biggest shareholder, the NZ Superannuation Fund. The shares closed at $5.84 on Friday, having spent most of the day in a halt.
Local data today include the food and rental price indices for June, ahead of Thursday's June-quarter consumers price index. Inflation is expected to remain muted, and investors are more focused on the shifting global economy.
The kiwi dollar was little changed at 65.65 US cents at 8am in Wellington from 65.79 cents on Friday in New York.