Here's our summary of key economic events overnight that affect New Zealand, with news that while all the market chatter is about the spectacular rise of Nvidia and the emergence of AI as a "new industry", the rest of the global economy seems to be generally expanding modestly.
But first up, we should note it is a public holiday in Japan, the world's fourth largest economy, the Emperor's Birthday.
In the US, new jobless claims fell to near their record lows of under 200,000 last week and far below what was anticipated. Continuing claim levels fell too and there are now 2.1 mln people on these benefits out of a 161 mln employed labour force, a tiny fraction. Still no labour market stress to report.
US existing home sales rose marginally back to an annual sales rate of 4 mln which it was last at in August 2023. (It peaked at 7.25 mln in 2005 so it remains modest and currently at the level first reached in 1975.) It's a market essentially in hibernation.
Canadian retail sales probably slipped in January after they reported a strong December expansion and taking overall 2023 sales volumes up +2.3%.
Across the Pacific, the Bank of Korea kept its base rate unchanged at 3.5% during its February meeting. This was as expected. Korea's inflation rate is 2.8%.
In China, vehicle shipments are projected to drop almost -16% in February from the same period last year, according to preliminary data released yesterday. Demand for electric vehicles is also slowing.
China’s overseas investment in metals and mining as part of its Belt and Road Initiative surged by more than +150% in 2023, hitting US$19.4 bln with energy transition metals the main focus. Total Belt and Road investments now top +US$1 tln, this updated report shows.
Some preliminary PMIs for February are starting to come through and the first was from Japan, showing its factory sector contracted more than expected, and its services sector expanded again, but by less than expected. Together they paint a picture of growth stalling in Japan.
In the US, there were rising expansions to report in their factory sector, to a 10 month high, even if still modest, and they had a slight easing in their services expansion.
In Germany things contracted harder, but for the EU overall their services sector is no longer contracting, helping keep things stable.
In India, they are in a quite different space with manufacturing expanding strongly, and their services sector doing even better. India has replaced China as a major source of global growth, bolstering the continuing expansion in the US.
Australia said average weekly ordinary time earnings for full-time adults was AU$1,888.80 in November (NZ$2030/week). The annual increase of +4.5%, or AU$81 a week, was the strongest since May 2013, other than a brief spike in average earnings early in the pandemic.
There was another small decrease in container freight rates last week from the week before, but they remain unusually high on the insecurity same drivers around the canal choke-points. Bulk cargo rates have started to move modestly higher but are not outside 'normal' ranges.
The UST 10yr yield starts today at 4.33% and up +1 bp from this time yesterday. The key 2-10 yield curve inversion is deeper at -39 bps. And their 1-5 curve inversion is less at -68 bps. But their 3 mth-10yr curve inversion has also lessened to -107 bps. The Australian 10 year bond yield is now at 4.19% and down -1 bp. The China 10 year bond rate is under 2.42% and a new all-time low. The NZ Government 10 year bond rate is up +1 bp at 4.91%.
On Wall Street, the The S&P500 hit a fresh record high and is up +1.9% while the Nasdaq added more than +2% after Nvidia's results topped forecasts. Nvidia shares gained more than +15% as the company reported record revenue and issued upbeat guidance on strong demand, suggesting to investors the AI-fueled rally will continue. European markets ended their Thursday sessions strongly, up about +1.5% across the board. Yesterday Tokyo ended up +2.2% and an all-time high, Hong Kong was up +1.5% and Shanghai up +1.3%. The ASX200 missed out on yesterday's rallies, ending unchanged, while the NZX50 booked a +0.9% gain.
The price of gold will start today down -US$8/oz from yesterday at US$2019/oz.
Oil prices are +50 USc/bbl firmer at just over US$78.50/bbl in the US while the international Brent price is up to just under US$83/bbl.
The Kiwi dollar starts today at just on 61.9 USc and up nearly +¼c from yesterday. Against the Aussie we are also +¼c firmer at 94.6 AUc. Against the euro we are little-changed at 57.2 euro cents. That all means our TWI-5 starts today at just over 71.3.
The bitcoin price starts today at US$51,432 and essentially unchanged from this time yesterday. Volatility over the past 24 hours has remained modest at +/- 1.3%.
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