Here's our summary of key economic events overnight that affect New Zealand with news risk sentiment in financial markets seems to be improving.
But in Europe, the horrors of Russian 'war crimes' are hardening attitudes. Lithuania has declared it won't buy any Russian gas or oil. Other European countries are distancing themselves further from economic contact with Russia. Berlin has taken control of Gazprom’s German business in a move they say was necessary to secure continuity of supply in Germany and Europe. As a consequence the world's oil markets are very unsettled.
Only Hungary is turning a blind eye to what is happening.
Meanwhile, American factory orders fell -0.5% in February from January, in line with what was expected. What wasn't expected was an upward revision for January however. The February decline was largely due to fewer orders for "transportation equipment" which means fewer orders for aircraft. Excluding that, factory orders actually rose +0.4% in a month, and are up almost +13% from February 2021.
Also rising strongly were Canadian building permits in February which were up more than +26% from a year ago and a record high for any February month, up +21% from January.
The Bank of Canada Business Outlook Survey shows that businesses there continue to expect strong sales growth but at a more moderate pace than over the past year. Growth is coming as restrictions related to the pandemic ease. But they also expect continuing high inflation. This Q1-2022 was the second most positive survey ever since the quarterly series began in 2003. This might be a trigger for an aggressive rate hike there.
In China, more than half of China's leading lenders reduced their exposure to the real estate sector last year, in a trend likely to exacerbate the cash squeeze for troubled developers. But oddly, the price of copper, which is largely tied to Chinese property development activity, is hovering near record highs again.
The pandemic fight in China is getting ugly. The lockdowns in places like Shanghai are causing real difficulties keeping food supplied to large urban areas.
Singapore's PMI slipped marginally in March and is now barely expanding, and it is now at a level that is the lowest since August 2020.
In India, business conditions improved in March, but the latest results showed the gloss is going off with slower expansions in factory orders and production as well as a further decline in new export orders. At the same time, there are mounting price pressures. These inflation concerns weighted on business confidence, which fell to its lowest level in two years.
In Australia, an upward revision to February job ad levels which were maintained in March points to further solid employment gains and upward pressure on wages growth. March was the first time ever they posted more than 250,000 job ads.
And the housing market in Australia is in a new surge, not only for house prices, but rental vacancy rates fell to a record low of just 1% nationwide in March, as rental supply dwindled and demand ramps up following the return of international students.
We should note that the price of tin is rising again, as well as zinc, which is almost at a new record high.
Meanwhile, the IPCC is having trouble wrapping up its latest report with difficulty agreeing on the future of fossil fuels and the role of carbon-removal technologies in efforts to fight warming temperatures. The New Zealand representative on this panel is a social scientist, Judy Lawrence. It is not all 'bad news' - the report when it is released is expected to show they now think staying below a +2o warming is both achievable and affordable even if +1.5o is no longer attainable.
The UST 10yr yield opens today at 2.42% and up +3 bps from this time yesterday. The UST 2-10 rate curve starts today inverted by -4 bps and less than yesterday and conviction levels are not high. Their 1-5 curve is however flatter at +84 bps. Their 30 day-10yr curve is marginally steeper at +223 bps. The Australian ten year bond is back down -6 bps at 2.85%. The China Govt ten year bond is unchanged at 2.82%. And the New Zealand Govt ten year is up +2 bps at just on 3.32%.
On Wall Street, the S&P500 is up +0.6% in early Monday afternoon trade. Overnight, European markets rose a similar level although London only rose +0.3%. Yesterday, Tokyo was up +0.3%. Hong Kong rose +2.1%. Shanghai was closed for a holiday and will be closed again today. The ASX200 ended its Monday session up +.03% and yje NZX50 Capital Index fell -0.3% largely on Air New Zealand weakness.
The price of gold starts today at US$1930/oz and up +US$4/oz from this time yesterday.
And oil prices are up +US$3 to just under US$102/bbl in the US. And the international Brent price is now just on US$107/bbl.
The Kiwi dollar will open firmer than at this time yesterday at 69.6 USc. Against the Australian dollar we are essentially unchanged at 92.3 AUc. Against the euro we are also very much firmer at 63.4 euro cents and a +¾c gain. That all means our TWI-5 starts today at just under 74.9 which is actually a new four month high.
The bitcoin price is down -2.3% since this time yesterday to US$45,327. Volatility over the past 24 hours has been moderate at +/- 2.4%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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