Here's our summary of key economic events overnight that affect New Zealand, with news risk aversion is taking hold among global investors. The pullback is especially noticeable from China.
Major stock indexes around the world were all lower on Friday amid concerns about an escalation in the Middle East conflict, elevated bond yields and mixed corporate results.
In Canada, retail sales are expected to have stagnated in September, according to preliminary estimates. That follows a small decrease in August.
In Ottawa, their main banking regulator has told lenders to hold more capital against mortgages that have had their repayment terms extend beyond the original terms due to the stress of interest rate hikes. They are moving to contain risks building in the Canadian home loan system.
In Japan, their CPI inflation rate fell to 3.0% in September from 3.2% in August, the lowest level in a year.
In China, foreign direct investment fell -8.4% in the first nine months of 2023, a faster pace of retreat than the -5.1% fall in August and the -4.0% fall in the seven months to July. This is a retreat and disengagement that must be worrying the Beijing economic mandarins.
Foreign money managers are bailing on some of the biggest names in China’s technology sector as a global exodus from the nation’s equities deepens.
And staying in China, they held lending rates steady at the October fixing, as widely expected. The one-year loan prime rate, which is the medium-term lending facility used for corporate and household loans, was left unchanged at a record low of 3.45%; and the five-year rate, a reference for mortgages, was maintained at 4.2% for the fourth straight month. This decision came amid growing signs that the Chinese economy is stabilising.
Taiwanese export orders rose sharply in September from August, up almost +12% to US$51.4 bln. But they were down -15.6% from a year ago, the same year-on-year decrease in the prior month.
Indonesia’s central bank unexpectedly raised its benchmark rate by +25 bps to 6% late on Thursday after months of standing pat, as it looks to support the stability of the rupiah and guard against inflation.
Producer prices in Germany tumbled by almost -15% in September from a year ago following a 12.6% drop in August. It was the third straight month of decline and the steepest pace since data collection began in 1949. But it is largely due to the base effect of very high oil prices a year ago.
In Australia, their central bank released its Annual Report yesterday and it reported huge financial losses from its extraordinary pandemic stimulus measures that have blown out to about AU$43 bln and sunk its balance sheet deeper into negative equity. See page 191. (The RBNZ released its Annual Report on October 12, 2023, and it retained little-changed net worth levels. See page 101.)
The UST 10yr yield has fallen back today. It is now at 4.93% and down a net -6 bps from this time yesterday. But a week ago it was at 4.63% so a very major shift up from then. Their key 2-10 yield curve is much less inverted, now just at -16 bps. A week ago this key inversion was -43 bps. Their 1-5 curve is unchanged at -54 bps. Their 3 mth-10yr curve inversion is slightly more inverted, now at -49 bps. The Australian 10 year bond yield is now at 4.73% and down -3 bps from yesterday. The China 10 year bond rate is down -1 bp at 2.74%. The NZ Government 10 year bond rate is -3 bps softer at 5.62%. A week ago it was at 5.51%.
Wall Street is down -0.6% in its Friday trade and heading for a -2.1% weekly retreat. Overnight European markets all ended down about -1.5%. Yesterday, Tokyo ended its Friday session down -0.5% for a -2.3% weekly fall. Hong Kong fell -0.7% on Friday for a -3.6% weekly drop. Similarly, Shanghai fell -0.7% on Friday and booked a -3.5% weekly fall. The ASX200 ended its Friday trade -1.2% lower to take the weekly level down -2.1%. The NZX50 fell -1.3% on Friday to be -2.4% lower for the week. Earnings are no longer the key valuation metric; yields are.
The Fear & Greed index we follow is still hard over on the 'fear' side but little-changed from this time last week.
The price of gold will start today at US$1982/oz and up +US$21/oz from this time yesterday - and a new three month high. A week ago it was at US$1928/oz so up +2.8% from then.
Oil prices have risen another +50 USc to be now at just over US$88.50/bbl in the US. The international Brent price is now just over US$91.50/bbl. A week ago these prices were US$86/bbl and US$$89.50/bbl so a +2.2% rise in that time.
The Kiwi dollar starts today at 58.3 USc and and down -20 bps from yesterday. This is a new low in almost a year. A week ago it was at 58.9 USc. Against the Aussie we are still at 92.3 AUc which is down -1¼c since the start of the week. Against the euro we have fallen to 55 euro cents and a five week low. That all means our TWI-5 starts today at just on 68.4, down -85 bps from this time last week. We are starting to get into territory where the lower exchange rate can itself be inflationary.
The bitcoin price starts today at US$29,478 and up a solid +2.8% from this time yesterday. Earlier it had pushed over US$30,000 before retreating somewhat. And it is now at NZ$50,000, the first time since July. A week ago it was at US$26,713, so up +10.4% since then. Volatility over the past 24 hours has been high at just under +/- 3.0%.
This is the Labour Day weekend holiday in New Zealand. Monday is a full public holiday. Go, the All Blacks!
Daily exchange rates
Select chart tabs
The easiest place to stay up with event risk is by following our Economic Calendar here ».
We welcome your comments below. If you are not already registered, please register to comment
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.