A socially-distanced line of construction workers arrive for work on Tuesday at Wynyard Quarter in Auckland under the more-relaxed Level 3 rules. Thursday's Level 2 rules will allow even more construction work to re-start, along with the reopening of malls, cafes, shops and offices generally. Photo: Peter Bale.

Shares in Kathmandu, Sky TV, Auckland Airport and Serko surge as Level 2 reopening of domestic travel, shops, bars and malls is announced for Thursday

Markets: The NZ sharemarket pushed higher following news the country will move to Level 2 this Thursday. Retailer Kathmandu gained 15.2 percent to $1.06 while shares in Sky Television also spiked higher gaining 20 percent to close at 38.5c following the resumption of some sporting fixtures.

Taking off: Other stocks to benefit from the news were Auckland International Airport up 5.2 percent at $5.97 and travel expense software developer Serko, gaining 11 percent at $2.80. The NZX50 closed up 0.6 percent at 10,760, just 19 points off its previous high on 17 April.

Dire outlook: A survey of the hotel and accommodation industry has confirmed the sector is facing a bleak outlook. The Horwath HTL and Tourism Industry Aotearoa survey through April found more than 40 percent of the country’s hotels are not operating, while 73 percent of respondents expected they would be worse off in two years than they were last year. In Queenstown almost 60 percent of hotels closed.

No business, fewer jobs: Horwath HTL director Wim Ruepert said the results had come as hotels reported an average occupancy of 15 percent in April, with 68 percent of hotels in regional areas “fully closed”. Job losses in the main visitor destinations are expected to be higher, from 69 percent for Queenstown hotels to 89 percent for hotels on the West Coast.

Retail spending walloped: Wallets were shut tight in April with few spending options apart from the weekly grocery shop. Retail card spending across the country fell more than $2.6 billion (47 percent) as non-essential businesses temporarily shut during the lockdown, Stats NZ reported. It marked the largest fall in both dollar terms and percentage change since the series began in 2002.

Nowhere to shop: Stats NZ said the decline was the equivalent of each person in the country spending about $520 less in April than they did in March. The hospitality sector, including accommodation, cafes, and restaurants, reported spending fell 93 percent or $721m. Petrol sales fell 60 percent.

More jobs losses: A further 700 SkyCity staff are set to lose their jobs, on top of the 200 announced last month due to the ongoing impact of Covid-19.

‘It’s different now’: CEO Graeme Stephens said the landscape and the outlook had fundamentally changed for the casino and hotel operator for the next 12 months.

“Weaker economies, lower personal disposable income, changed entertainment habits, restrictions on mass gatherings and physical distancing requirements, as well as long term travel restrictions will result in SkyCity reopening as a smaller, domestically focused business,” he said.

Slimmed down: SkyCity estimated the closure of its properties was costing the company around $90m in lost revenue each month, of which almost a quarter were labour costs. It expected to re-open its New Zealand properties in a staged way with reduced operating hours.

Capital raise #6: Once a market darling with investors for its attractive dividend yield, Z Energy has become something of a fallen star. It reported a 75 percent fall in full-year net profit on Monday and announced the need to raise $350 million in new capital, becoming the sixth listed company to do so in recent months.

Dividend cancelled: Pre-tax interest and depreciation earnings fell to $366 million, from $434 million in the previous year. The company offered 106 million new shares through a placement at a floor price of $2.75, a 12 percent discount to Friday’s closing price of $3.14 and below Z Energy’s 2013 initial public offering price of $3.50, while a share purchase plan would raise a further $60 million from existing holders. The company will not pay a dividend before September 2021.

In for repair: CEO Mike Bennetts said the funding provided flexibility as the firm sought to cut costs by as much as $96 million through a mix of recurring and one-off reductions. Z Energy didn’t provide guidance for the current year. Its shares have almost halved in the last 12 months.

Slowing sales: Tesla is under pressure in China with sales of its Model 3 sedan falling 64 percent in April compared with the previous month, despite a recovery in the electric car market, according to new data from the China Passenger Car Association (CPCA). Electric car sales in China rose 9.8 percent month-on-month in April.

It’s going to get worse: Trump administration officials warned of a further worsening unemployment in the coming months, with the jobless rate now expected to climb beyond 20 percent.

“Even if a second wave of outbreaks were to occur,” JPMorgan economists wrote on Friday, “the Fed has explicitly indicated that there is no dollar limit and no danger of running out of ammunition.”

25 percent unemployment? “I think there’s a considerable risk of not reopening. You’re talking about what would be permanent economic damage to the American public,” Treasury Secretary Steven Mnuchin told Fox News. He acknowledged the unemployment rate could even climb as high as 25 per cent.

Depression? Such a figure would put the current jobs crisis on a par with the Great Depression. “The reported numbers are probably going to get worse before they get better,” Mnuchin said.

‘No worries’: Try telling the stock market that the world’s largest economy is facing a Depression-level event. The S&P 500 is down just nine percent from its record-highs in December and back where it was in August last year, when the unemployment rate was 3.7 percent.

‘The Fed will save us’: Investors are thrilled the US Federal Reserve and other central banks, including New Zealand’s, are buying trillions of dollars worth of government and corporate bonds with money invented out of nowhere. That cash is being pushed out by by pension funds and banks into stock and other asset markets, boosting property prices.

Quote du Jour: “Even if a second wave of outbreaks were to occur,” JPMorgan economists wrote on Friday, “the Fed has explicitly indicated that there is no dollar limit and no danger of running out of ammunition.”  (ProPublica)

Andrew Patterson is Newsroom's Markets Editor and has worked for decades as a financial journalist, radio presenter and editor with Australia's ABC, Radio Live and NBR.

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