Better than expected earnings results draws investors; American data modestly positive; Singapore exports rise; Australia rescues its nickel industry; UST 10yr 4.30%; gold and oil up; NZ$1 = 61.2 USc; TWI-5 = 70.6

Here's our summary of key economic events overnight that affect New Zealand, with news investors are rediscovering their appetite for equity investments, a signal they see the future positively.

But first we should note that it is another long holiday weekend in the US. Monday in the US (Tuesday NZT) will be President's Day and markets, both bond and equity markets, will be closed.

The next release of a survey on consumer sentiment has it rising and confirming earlier surveys. The University of Michigan version rose slightly to a fresh high since July 2021 even if it was marginally below market forecasts.

US residential building consents slipped in January from December, but were +8.6% higher than a year ago.

But American housing starts slumped almost -15% in January to an annualised rate of 1.331 mln, lower than year-ago levels and the lowest since August and missing market forecasts by a lot. It is the biggest fall since April 2020.

Inflation is clearly not beaten yet even if it is down. US producer prices were up +0.3% in January from December, the biggest month-on-month increase in five months, following a -0.1% decline in December. Analysts expected a rise of +0.1%. Cost of services rose +0.6% m/m, the largest increase since July. But that all means producer prices are only a modest +0.9% higher than a year ago. It is the recent pickup that worries markets.

Petrol prices are a component of both CPI and PPI changes. Today their average nationwide price is US$3.284/gal (NZ$1.42/L, not a miscalculation). That is -4.0% lower than a year ago. But complaining about "high gasoline prices" is still built into their partisan conversations.

On Wall Street, with the December company results three quarters released by now, they show a modest +3.2% lift from a year ago. Against expectations however the story is more positive; 75% of S&P 500 companies have reported a positive EPS 'surprise' and 65% of S&P 500 companies have reported a positive revenue 'surprise'. This reminds us that late 2023 expectations were low - and unnecessarily so it turns out.

Money that shifted out of equities into money market funds is now moving back. Global equity funds racked up significant inflows in the week to February 14 as investor optimism returned for this stock market rally, despite lingering uncertainties over the Federal Reserve's rate cut plans. It is a global thing, including Australia.

In China, financial markets return on Monday after the Chinese New Year break. Authorities will be ready to cover any weaknesses, and investors are likely to take advantage. The 'Beijing put' is going to save many investors. But it might work for Beijing who seem to be engineering a substantial rise in the proportion of SOE control of overall GDP. Private ownership and control of large enterprises is now not seen in the country's best interests by Beijing.

Singapore's exports rose notably in January from December and were up almost +17% from a year ago. Analysts were expecting a more modest +5% rise.

As widely expected, the Russian Central Bank held its policy rate unchanged at 16%, a pause to the +850 bps hiking campaign that started in July 2023. (At the same time as the bank's press conference, which local media played in full, unusually, Alexi Navalny was killed in his Arctic prison. And no mention was made of that.)

International nickel prices are remaining "very low" at levels first reached in 2003. At these levels, miners are giving up, especially as the low-cost source is Indonesia who can survive at these levels. But Australia doesn't want mine shutdowns as it needs a viable local industry to power its green transition. So yesterday Australia classified nickel as a “critical mineral”, opening the way for the crisis-hit industry to access billions of dollars in cheap Federal government loans.

Meanwhile, global electricity production from fossil fuels continued to decline in 2023 (-2.8% year-on-year), largely due to reduced production from coal fired power plants (-8.8% y-o-y). Specifically, the reduction in production from the United States (-8.7% y-o-y), Germany (-26.7% y-o-y), Poland (-18.7% y-o-y), Japan (-7.7% y-o-y) drove the overall trend of this decrease in coal-fired electricity generation. Coal prices are now back to levels first seen in 2011. Conversely, net electricity production from renewable energy remained higher than the same period last year (+6.0% y-o-y), a trend that has been consistent since July 2023, driven by higher production from wind (+5.1% y-o-y) and solar power (+10.9%). Electricity production from nuclear power increased by 6.0% y-o-y, as production in France rebounded from the low levels of 2022.

The UST 10yr yield starts today at 4.30% and up +6 bps from yesterday, up +11 bps from a week ago. The key 2-10 yield curve inversion is a deeper at -37 bps. Their 1-5 curve inversion is shallower at -70 bps. And their 3 mth-10yr curve inversion has moved back to -108 bps. The Australian 10 year bond yield is now at 4.232% and up +4 bps from yesterday. The China 10 year bond rate is unchanged at 2.45% while they are on holiday. The NZ Government 10 year bond rate is up +5 bps at 4.92%. A week ago it was at 4.91% so little net change.

In Wall Street's Friday pre-long-weekend trading session, the S&P500 is little-changed and up a mere +0.2% over the week. Overnight European markets were varied. London took off, up +1.5% on the days to close up +1.8% for the week. Paris rose +0.3% overnight to be up +1.3% for the week. Frankfurt was up +0.4% on the day, up +0.8% for the week. Yesterday Tokyo ended its Friday session up +0.9% to be +4.3% higher over the week, and the star of the show. Hong Kong ended up +2.5% toi be +2.2% higher over the week. Shanghai remains closed. Singapore rose +1.4% yesterday to end its week up +2.4%. The ASX200 closed its Friday trade up +0.7% to enable a weekly +0.2% gain. The NZX50 also rose +0.7% on Friday but ended the week down -1.2%.

The Fear & Greed index is still at the "extreme greed" level where it was a week ago.

The price of gold will start today up +US$9/oz from yesterday at US$2010/oz. But that is -US$13/oz lower from this time last week.

Oil prices are up +50 USc at just on US$78.50/bbl in the US while the international Brent price is up similarly to US$83/bbl. Both prices are up about +US$2 over the last week.

The Kiwi dollar starts today at just on 61.2 USc and up +20 bps from this time yesterday. A week ago it was at 61.4 USc. Against the Aussie we are still at 93.7 AUc. Against the euro we are still at 57.8 euro cents. That all means our TWI-5 starts today at just under 70.6 and little-changed. A week ago it was at 70.9.

The bitcoin price starts today at US$52,006 down -0.4% from this time yesterday. But it is up a net +9.2% from this time last week. Volatility over the past 24 hours has been modest at just on +/- 1.5%.

The easiest place to stay up with event risk is by following our Economic Calendar here ».