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90 seconds at 9 am: US, European and Asian stocks fall on fears central banks and govts can't or won't do more to prevent a synchronised global slowdown; NZ$ down
Here's my summary on on the key news overnight in 90 seconds at 9 am, including news US stocks, European stocks and Asian stocks continued to fall as fears grow that central banks and governments either won't or can't do much more to prevent a synchronised global slowdown in economic growth.
Investors took money out of riskier assets and currencies and put their money into 'safe haven' assets such as US and Japanese Treasury bonds. This saw yields on those bonds hit record lows and both the US dollar and Yen strengthened. The New Zealand dollar fell to 79.1 USc overnight.
These fears about central bank impotence or intransigence are combining with worries about the austerity strategies being pursued by governments on both sides of the Atlantic.
Spain's announcement yesterday of an extra 65 billion euros of budget cuts, including a GST hike from 18% to 21%, has refocused attention on the German-led strategy in Europe of forcing governments to try to cut their way back to growth. Many fear this will worsen a deleveraging spiral that simply magnifies the weight of impossibly high debt loads in the peripheral European economies. See more here from Ambrose Evans Pritchard at The Telegraph.
US stocks fell 0.5%, European stocks fell almost 1% and Asian stocks fell almost 2 percent as investors weighed up recent central bank comments and actions. See more here at Bloomberg.
US Federal Reserve minutes released on Thursday morning our time showed the Fed divided over suggestions of a third round of quantitative easing, while the Bank of Japan announced moves yesterday that effectively left its monetary stimulus unchanged. See more here at Bloomberg.
Meanwhile, investors are putting their money into US and Japanese bonds. Bloomberg reports the 30 year Treasury bond yield fell in a fresh auction to a record 2.58% and the 10 year Treasury bond yield fell in an auction the previous day to 1.46%. See more here at Bloomberg.
These moves into 'safe haven' assets also saw the euro fall again against the US dollar and yen, while the pound also weakened against the US dollar.
Meanwhile in Australia, there was a surprise loss of 27,000 jobs in June. See more here at Bloomberg.
Markets will focused later today on Chinese GDP figures for the second quarter, which are expected to show annualised growth falling to 7.7% from 8.1%.