New Zealand bonds close lower as Brexit concern eases

The New Zealand government bonds closed lower on Monday as campaigning over whether Britain should remain in the European Union was suspended after the killing of a UK politician Jo Cox last Thursday.

The yield on the benchmark 10-year bonds, which moves inversely to its price rose 2-1/2 basis point to 2.515 percent.

A recent poll showed that the 'Remain' camp gained a narrow lead; a YouGov poll for The Sunday Times newspaper published at the weekend showed 44 percent supported remaining in the EU, as compared to 43 percent who supported leaving, based on interviews conducted on Thursday and Friday. Two other polls also showed public opinion tilted towards the 'Remain' camp after the killing of a UK politician Jo Cox on last Thursday.

Also, the final European Union referendum phone poll by BMG Research showed Bremain at 53.3 percent vs Brexit on 46.7 percent. On the other hand, including the ‘undecided’, vote for Remain stood at 46 percent vs Leave 43 percent and undecided 11 percent. The online poll has Leave 55 percent Remain compared to Leave 45 percent.

A British member of parliament, Jo Cox, was shot dead on last Thursday, resulting in the suspension of campaigning for this week’s referendum on the country's EU membership. Cox was one of the members of parliament advocating continued British membership.

Last week, the New Zealand Q1 Gross Domestic Product (GDP) rose 0.7 percent q/q, marginally higher than the market consensus for 0.5 percent, but lower from previous 0.9 percent q/q in the last quarter of 2015. Also, Q1 GDP rose 2.8 percent y/y, beating market expectations of 2.6 percent, from 2.3 percent during the same period a year ago. The latest growth was driven by the construction and health industries, but partly offset by decreases in the primary industries and manufacturing.

Markets will remain keen to focus on Thursday’s referendum on the United Kingdom’s membership of the European Union, while markets receive no more important data or events of great significance this week.

The New Zealand’s benchmark S&P/NZX50 Index closed up 22.47 points to 6,869.54.