Here's our summary of key economic events overnight that affect New Zealand with news markets sense the end of a long golden run. Or perhaps it is only because the Northern Hemisphere is turning its attentions elsewhere - vacations and Olympics. It is hard to know in thin trading.
The US economy added only +114,000 jobs in July, well below a downwardly revised +179,000 in June and forecasts of 175,000. It is also the lowest level in three months, below the average monthly gain of 215,000 over the prior 12 months, signaling the their labour market is in fact cooling off. But most of the weakness was in the tech sector with almost all other sectors holding their own.
Pressure on wages is easing too, with weekly earnings up only +3.3%.
Their jobless rate rose marginally to 4.3%, up from 4.1% in June. (s.a.) There are now 162.0 mln people employed, a record high, in a 169.7 mln labour force. (not s.a.)
This weakish American report actually had little impact on global markets because they were mostly sharply lower before this release and there was no added change after. You can claim it was 'priced in' and perhaps it was. But there is a broader re-ranking going on with a settling back in risk appetites. We shouldn't be surprised - markets never go up forever. The US Q2 earnings season reporting has been strong, but it is the less than stellar outlooks that are influencing investors.
Check back soon for an article to be published here (at 9am) putting recent moves in the global capital markets into perspective.
Meanwhile, US factory orders, which were expected to show a dip in June, did just that but the dip was larger at -3.3% than the -2.9% correction anticipated. The June fall comes after four consecutive rises however.
But American new vehicle sales rose more than expected in July to an annual rate of 15.8 mln, a good bounce back from the 15.2 mln vehicle sales rate in June.
The Bank of Canada's Q2-2024 market participants survey shows that these industry insiders see their central bank next cutting their 4.5% policy rate in October and then taking it all the way down to 3.0% by the start of 2026. This is on the back of lackluster economic expectations.
In China, their central bank said it will be pushing commercial banks to "do more" for the "real economy". It wants to shift the financial sector’s focus to "benefiting people’s livelihoods and boosting consumption" over the coming months. This change in emphasis follows pressure from the CCP Third Plenum meeting chaired by President Xi earlier in the week. The practical impact? Perhaps more debt issued for projects that have immediate effects but little long-term gains.
There are calls for monetary authorities to allow higher inflation as some sort of spur to 'growth'. Meanwhile, commodity prices keep on sinking as the overall stall extends. None of this is coming at a good time for China and they take their summer break. That tends to be when the leaders 'relax' at their seaside compound at Beidaihe. If they don't return with better plans and actions, there will be some grumpy countrymen.
Meanwhile, flooding pressures are not easing. And that has implications for food security and agricultural output, especially for gains.
In India, lenders to near-bankrupt education and training giant Byju are seeking to block the company from making its sponsorship payments to the BCCI, India's cricket authority. Billions are involved.
Singapore's widely-watched local PMI was modestly positive in July, but far less positive than the internationally-benchmarked version.
The UST 10yr yield is now at just on 3.79% and down another sharp -19 bps from yesterday. A week ago it was at 4.20% so down -40 bps since then. That is a very big move. The key 2-10 yield curve inversion is shallower at only -9 bps and also a big weekly move. Their 1-5 curve is lesser at -75 bps. But their 3 mth-10yr curve inversion is much deeper at -157 bps. The Australian 10 year bond yield starts today at just on 3.99% and down -9 bps. The China 10 year bond rate is down -2 bps at 2.12% and a new all-time low. The NZ Government 10 year bond rate is now just on 4.26%, and down a modest -4 bps from yesterday. A week ago this was at 4.41% so a net -15 bps drop.
Wall Street in Friday trade on the S&P500 is down a hard -1.8% and that makes it -2.4% lower for the week. Although this seems led by tech falls, in fact it is broad-based. Overnight European markets were all lower by between -1.5% and -2.5%. Yesterday Tokyo ended its Friday trade down -5.8% to be a humbling -5.9% lower for the week. Hong Kong fell -2.1% for a weekly loss of -1.5%. Shanghai was down -0.9% for the day but up +0.6% for the week. Singapore fell another -1.1%. The ASX200 was down -2.1% in Friday trade, but up a net +0.3% for the week. The NZX50 dipped -0.3% on Friday for a weekly rise of +0.8%, starring again among the markets we follow.
So it will be no surprise the Fear & Greed Index ends the week hard over in a 'fear' range, a big shift from the 'neutral' reading last week.
The price of gold will start today down -US$3 from yesterday at US$2432/oz. But it is up +US$49 from this time last week, a +2.0% gain. A one point overnight it hit a record high before falling back.
Oil prices are -US$2.50 lower at just over US$73.50/bbl in the US while the international Brent price is just under US$77/bbl. A week ago these price were US$76.50 and US$80 respectively.
The Kiwi dollar starts today another +10 bps firmer at just on 59.6 USc. A week ago it was at 58.9 USc so a net +½c recovery. Against the Aussie we are holding at 91.5 AUc. Against the euro we are down -½c at 54.6 euro cents. That all means our TWI-5 starts today at 68.4 and down -30 bps from yesterday. A rising Yen had influence on this too.
The bitcoin price starts today at US$63,058 and a smallish +1.2% recovery after yesterday's big fall. But it is down from US$67,495 a week ago, a net fall of -6.6% or -US$4437. Volatility over the past 24 hours has been moderate, at +/- 2.6%.
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