Here's our summary of key economic events overnight that affect New Zealand, with news that China is now on a full national holiday for a week (春节, Year of the Wood Dragon) and authorities managed to stave off a share market crisis before they closed.
In the US, the S&P500 is about to close above 5000 for the first time. As we post this, there is 75 minutes of trading this week to go. That means it is up +0.6% today, up +1.4% fort the week, and up +6% so far this year. And all this is in the face of rising bond yields which makes it a bit unusual. The Fed's win in its battle against inflation while keeping employment growing is a key factor that profits remain robust. Investors are impressed.
In January, Canada added +37,000 new jobs in the month, a surprise because a decrease was anticipated. But +49,000 were part time positions and full time employment fell -12,000. Their jobless rate eased slightly on this data, also not expected. Unfortunately for them, their population grew faster than employment.
In Japan, the Nikkei 225 Index jumped as much as 1.1% before settling only marginally higher at 36,897 yesterday (Friday), its highest levels in 34 years as strong corporate earnings, a weakening yen and a dovish outlook on Bank of Japan monetary policy pushed the markets to these new heights. On Thursday, a Bank of Japan Deputy Governor said the central bank would not aggressively tighten its monetary policy even if it eventually decides to end negative interest rates.
In China, under official pressure banks are shoveling out the loans. Banks extended more than ¥4.9 tln in new yuan loans in January, a record high since comparable records began in 2004 and beating forecasts of ¥4.5 tln jump. Mortgages rose to ¥980 bln in new lending and corporate loans jumped by ¥3.86 tln. Meanwhile, "total social financing" which is a broad measure of credit and liquidity, also reached a record high level of ¥6.5 tln (NZ$1.5 tln), well above forecasts of ¥5.55 tln.
In Hong Kong, the show trial of Apple Daily publisher Lai has become ludicrous and the Ministry of State Security pushes hollow claims in a warning to anyone else not toeing the Party Line - or anyone who didn't toe it even prior to their imposing the new "national security" law.
We should note that on Wednesday is election day in Indonesia. They will get a new president. Indonesia (the world's fourth largest country by population) rarely features in Kiwi minds. (It should do.) But it does figure large in Australia, and if it matters to Australia, it will end up mattering to us. Some 200 million Indonesians will elect 20,000 legislators. But the main show is the presidency, a three-way race. But all three presidential candidates have major Trump-like flaws. Australia is right to be concerned. It could get mean, messy, retributional, and with "faith-based" religion screwing people's emotions. The days of Indonesia being a relatively 'moderate' regional influence may be coming to an end.
With China largely closed for its New Year holidays, commodity prices are likely to just meander along with little direction. But that won't stop chocolate prices racing higher on climate-related supply challenges. Cocoa prices were up +17% last week alone, to be up +42% so far this year alone, up +123% in a year and up +160% since this surge started in mid-2022. Chocolate is back only as a luxury item. Meanwhile sugar prices, which maxed out in 1975, aren't showing any similar acceleration.
Staying with commodities, the price of palladium fell below that of platinum for the first time since April 2018 as growing demand concerns and bets on stable supply weighed on the metal. The price of palladium is now at its lowest since mid 2017. Palladium (and/or platinum) is most used in catalytic converters for ICE cars.
Household spending rose +2.3% in December from a year ago in Australia. This was the smallest growth in household spending since February 2021. But that is before inflation was accounted for. Discretionary spending actually fell -0.6% (also before accounting for inflation). This data highlights how their cost-of-living crisis is affecting them.
The UST 10yr yield starts today at 4.19% and up +2 bps from yesterday. That is up +17 bps from 4.04% a week ago. The key 2-10 yield curve inversion is little-changed at -30 bps. Their 1-5 curve inversion is less at -72 bps. And their 3 mth-10yr curve inversion is little-changed at -121 bps. The Australian 10 year bond yield is now at 4.19% and up another +3 bps from yesterday. The China 10 year bond rate is unchanged at 2.45% and still looking quite manipulated - all other durations around it are still falling. The NZ Government 10 year bond rate is up +9 bps at 4.91%.
Wall Street is in its Friday trade up +0.6% having pushed through the 5000 level. If it closed at this level it will be a gain of +1.4% for the week. Overnight European markets were all down about -0.2%. Yesterday Tokyo ended its Friday session unchanged to be up +1.3% for the week. However Hong Kong fell -0.8% to be up +2.7% for the week. But Shanghai was closed for their long holiday and ended its week up +4.8% is aggressive State buying. Singapore was down -0.2% yesterday. And the ASX200 ended Friday unchanged to be down -0.7% for the week. The NZX50 was also little-changed yesterday to be down -0.5% for the week.
The Fear & Greed index has moved back to the "extreme greed" level whereas a week ago it was in the "greed" range.
The price of gold will start today down another -US$8/oz from yesterday at just on US$2023/oz. A week ago this price was US$2036/oz. Rising bond yields make it tough for gold.
However oil prices are still on the move up, up +50 USc today to just under US$76.50/bbl in the US while the international Brent price is now just over US$81.50/bbl. These levels are +US$2 higher than a week ago.
The Kiwi dollar starts today at just on 61.4 USc and up +½c from this time yesterday and the same gain over the week. Against the Aussie we are also up nearly +½c at 94.3 AUc, and a 14 month high. Against the euro we open at just under 57 euro cents and also up +½c. That all means our TWI-5 starts today at just on 70.9 and up +50 bps from yesterday at this time and equalling its 2024 highs.
The bitcoin price starts today at US$47,622 and up another large +5.8% from this time yesterday. And this new higher level is +10.2% higher than a week ago and its highest since December 2021. Volatility over the past 24 hours has been high at just on +/- 3.0%.
Select chart tabs
The easiest place to stay up with event risk is by following our Economic Calendar here ».