Markets rally despite the pandemic

<p>Kia ora,</p><p>Welcome to Wednesday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.</p><p>I'm David Chaston and this is the International edition from Interest.co.nz.</p><p>Today we lead with news that border closures seem to be coming back to help slow the spread of Omicron, but through it all, the global economies are still functioning.</p><p>But first up today, the <a href="https://www.globaldairytrade.info/en/product-results/" target="_blank"><strong>overnight dairy auction</strong></a> brought an unexpected fall, even if it was a relatively minor -1.5% dip. It was less in NZD terms. The expected rise in SMP didn't actually amount to much, and the expected rise in the WMP price turned into a retreat. Still, <a href="https://www.interest.co.nz/charts/commodities/dairy-prices" target="_blank"><strong>prices are +28% higher than a year ago</strong></a> and +10% higher than four months ago. Despite today's unexpected dip, this is unlikely to change any milk price pay-out forecast. This is the first reduction since the string of falls in the April to August period, ending eight straight rises. </p><p>In the US, equities have staged a recovery after three days of being lower. Good corporate results by both tech companies, and perhaps more importantly, by retailers, has led the rebound. Markets may have been too hasty in judging the US Administration has lost its Build Back Better program, with brighter prospects for a re-vote in mid January for the US$2 tln measure.</p><p>And early data in the Christmas retail period suggests Americans have their wallets open, and sales could be <a href="https://tradingeconomics.com/united-states/redbook-index" target="_blank"><strong>+16.4% higher</strong></a> than a year ago, easily overcoming for intervening inflation. <a href="https://www.sensormatic.com/" target="_blank"><strong>Other monitors</strong></a> have the gain at +19%.</p><p><a href="https://www150.statcan.gc.ca/n1/daily-quotidien/211221/dq211221a-eng.htm?HPA=1" tar