Here's our summary of key economic events overnight that affect New Zealand, with news 'good news' on the economic front is being viewed as 'bad' for investors.
First in the US, the widely-watched ISM services PMI rose to record a healthy expansion, and by more than expected. New orders and employment both improved in a clear sign the giant American economy doesn't seem to be heading for a slowdown yet. (But to counter than enthusiasm, their internationally-benchmarked Markit services PMI is recoding a small contraction, something it has done for 4 straight months now.)
But supporting the ISM view, American factory orders rose in October and by more than expected, and rose at a much faster pace than they did in September. It was their biggest rise in four months and they were more than +11% higher than year-ago levels, so more than inflation is at play here.
These improvements are confusing equity and bond markets. After last week's Powell guidance, markets had expected data to support the Fed's idea that the expansion pressures were waning and the central bank could ease back on their rate hikes. But this latest data is very expansionary and keeps the pressure on. The next Fed decision is doe on December 15 (NZT).
In Canada, they did expect a bounce-back in housing consents issued in October - but it didn't arrive. The fall-off was less than for September, but it was still a fall away.
In China, more big tier 1 cities are easing pandemic restrictions. There is clearly a revised approach to pandemic control underway there, and it comes as case numbers rise sharply. China faces only bad options having missed some good options by dismissing Western vaccines.
And those bad options are playing out in their economy; their services sector recorded a terrible November PMI, much worse than the official view. And car dealers report that their inventory levels are sharply higher.
Japan is in a much better state, even if their minor service sector expansion disappeared in November.
And India is in an even better state still, with their services sector expanding at about the same pace as the US.
In the EU, retail sales were slightly weaker than expected in October, their lowest in 10 months and dipping more than expected. Recession worries there are rising, and this data isn't helping.
In Australia, they reported that company profits fell an unexpected -12% in Q3-2022 from Q2, missing market expectations of a small growth, and following an upwardly revised +7.8% rise in Q2. This was the first decline in company profits since the fourth quarter of 2020, amid falling commodity prices. Inventories rose almost +8%.
And Australia's service sector contracted again in November, reinforcing the overall dour business mood there. Their construction sector is still contracting too, but less so in November than in October. Only their factory sector is showing any expansion.
The Reserve Bank of Australia reviews its rates again today, and another +25 bps riser is anticipated. They will next review again in February when a further +25 bps is likely too. To they will have raised rates by +50 bps at least in between the RBNZ reviews. In February, the RBA will then be at 3.35% and closing the gap on the RBNZ's 4.25%
The UST 10yr yield starts today at 3.59% and up +10 bps from this time yesterday. The UST 2-10 rate curve is unchanged an inverted at -79 bps. And their 1-5 curve is less inverted at -98 bps, while their 30 day-10yr curve is a lot less inverted at -23 bps. The Australian ten year bond is up +4 bps at 3.38%. The China Govt ten year bond is up +2 bps at 2.94%. And the New Zealand Govt ten year will start today down -2 bps at 4.01%.
On Wall Street, the S&P500 has started its Monday session down -1.5% on the fears of further large US Fed rate hikes. Overnight, European markets ended about -0.5% lower although the exception was London which was up +0.3%. Tokyo ended yesterday up +0.2%. Hong Kong has continued its giddy run, up a massive +4.5% yesterday. Shanghai was up a strong +1.8% too. The ASX200 ended its Monday session up +0.3% and the NZX50 was also up +0.3%.
The price of gold will open today up at US$1772/oz and down -US$25.
And oil prices start today down -US$1 from this time yesterday at just on US$79/bbl in the US while the international Brent price is down to just over US$84.50/bbl. China is reducing petrol prices.
The Kiwi dollar will open today at 63.1 USc, and down a full -1c from this time yesterday. Against the Australian dollar we are -½c softer at 93.9 AUc. Against the euro we are at 60.1 euro cents and down more than -¾c. That all means our TWI-5 starts today at 71.6 and back to where it was in the middle of last week.
The bitcoin price is now at US$17,036 and virtually unchanged from this time yesterday. Volatility over the past 24 hours has modest at just +/- 1.3%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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