Here's our summary of key economic events overnight that affect New Zealand, with news global financial markets are still assuming the Gaza-Israel flare-up won't affect them.
On Wall Street analysts are betting the American economy is actually operating better than they had been assuming. And tech stocks are rising ahead of earnings reports that are assumed to be strong. Consumer stocks are rising as well. The S&P500 is higher as are bond yields as eyes turn to how the US Fed will assess this continuing strength. The wisdom of ignoring global pressures is not front-of-mind there at present. A higher risk appetite seems an odd reaction in the circumstances.
In New York State however, business activity edged lower in their factories. This was the seventh monthly fall in the past year, one that has essentially oscillated around a steady state. This time new orders were a little soft, but employment held up. That was probably because looking ahead, firms remained relatively optimistic about the six-month outlook
In Canada, wholesale sales rose +2.3% in August, led by machinery and equipment. This was a good bounce-back from the no-change in July, although not as much as was anticipated. But the waterfront strike in Vancouver in that month probably affected this result.
And staying in Canada, higher interest rates are souring the mood of both consumers and businesses. A quarterly survey for their central bank shows a steepening mood retreat.
In India, wholesale prices unexpectedly dropped in September, extending the period of wholesale price deflation to a full six months now. Given the have CPI increases of about 5%, you might expect that to ease soon from the wholesale price weakness.
A weak monsoon has affected large parts of the rural economy, and badly. One indication is that sales of entry-level cars slumped -75% to just 35,000 units in the three months through September from a year earlier. Sales of motorcycles and scooters, the favoured modes of transport in villages also fell -39% and -25% respectively. These are huge reactions as farmers face the future with building fears.
In China, their central bank injected ¥783 bln (NZ$183 bln) into their banking system yesterday via their medium-term lending facility, but at an unchanged 2.50% rate. This remains the lowest rate on record for a 1-yr MLF. It has fallen steadily from 3.30% in 2019. This latest injection is a third more than the September ¥591 bln and this the most they have ever injected.
The tough conditions give opportunities for short sellers. Now regulators are moving to try and quash short selling in China.
In Europe, yesterday we noted the Polish election. The results are not official yet, but exit polling suggests that the EU-centric opposition parties may have won over the ruling Catholic-conservative nationalist party. If confirmed, it could return Donald Tusk to power. Poland may not be going the Hungary/Slovakia way and this is likely to be an important shift in the EU.
Staying in Europe, end of year retail prospects look tough in the UK. There, almost one in three adults expect to spend less on Christmas this year, with most blaming the rising cost of living.
The UST 10yr yield starts today up +9 bps from where we started yesterday at 4.72%. Their key 2-10 yield curve is less inverted at -37 bps. Their 1-5 curve is also less inverted at -70 bps. Their 3 mth-10yr curve inversion is sharply less inverted at -71 bps. The Australian 10 year bond yield is now at 4.52% and up +8 bps from yesterday. The China 10 year bond rate remains at 2.71%. The NZ Government 10 year bond rate is -3 bps lower at 5.48%.
Wall Street has started its week off in an unusually good mood, up more than +1.0% in its Monday trade. Overnight European markets started their week positive but less so, all up about +0.3%. Yesterday, Tokyo ended its Monday session down -2.0% however. Hong Kong fell -1.0%, and Shanghai fell -0.5%. The ASX200 ended its Monday trade down -0.4% and the NZX50 fell -0.7%.
The price of gold will start today at US$1922/oz and down -US$11/oz from this time yesterday.
Oil prices have slipped a bit more than -50 USc to be now at just under US$86/bbl in the US. The international Brent price is now just over US$89/bbl.
The Kiwi dollar starts today at 59.2 USc and recovering +40 bps from yesterday's open. Against the Aussie we are slightly softer again at 93.4 AUc. Against the euro we have risen slightly to 56.2 euro cents. That all means our TWI-5 starts today at just under 69.5 which is up +25 bps from yesterday.
The bitcoin price starts today at US$28,120 which is up +4.4% from this time yesterday. However, volatility over the past 24 hours has again been extreme at +/-5.7% as this crypto briefly flirted with US$30,000 earlier. In the UK, Binance has suspended access to its crypto exchange for new users based in the UK, in response to local regulator actions.
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