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Here's our summary of key events overnight that affect New Zealand, with news financial markets are souring today.
But first, the overnight dairy auction brought little change. Although volumes offered were the highest in ten months, prices dipped -0.4% again, for the third time in a row, and the seventh time in the past eight auctions. However, the falling Kiwi dollar enabled the overall result to post a +1.1% gain in local currency. In fact, that means overall prices are back to where they were in June in New Zealand dollars. But today's auction won't be changing anything at the farm gate and yesterday's confirmation from Fonterra that they are staying with their very wide forecast range for the 2019/2020 season is confirmation of that.
Wall Street has returned from their long weekend holiday in a grumpy mood. The S&P500 is down the thick end of -1% and this time it is economic data that is finally to the fore.
The widely watched ISM factory PMI has dived into a contraction. And that was led by a sharpish drop in new orders. In fact, this is the first contraction in nearly three years. Markets noticed.
They also noticed that construction spending fell -2.7% in July from the same month a year ago.
All eyes on now on August car sales reports. Analysts expect them to be flat in August from July but any undershoot is likely to be market-negative.
In fact, reports are increasing of bankruptcies in the US trucking industry. 640 carriers went out of business in the first half of 2019, up from 175 for the same period last year and more than double the total number of trucker failures in all of 2018.
In China, they are preparing major new stimulus. China will step up fiscal support to boost growth amid more signs of economic slowdown, according to a statement released by the government’s Financial Stability and Development Commission. This is a body led by the top China trade negotiator with the US.
Yesterday, Shanghai equities were up modestly after the announcement.
In the UK, their new prime minister seems to have lost the support of their parliament. A new snap election seems likely now. The EU still has even less of an idea of where the UK stands in its Brexit negotiating position.
In Australia, their central bank has kept its policy rate at 1%, surprising no-one. But they have highlighted growing economic growth concerns. And it made specific mention of the very recent property markets 'turnaround' in Sydney and Melbourne but didn't characterise it in any way. However they are clearly worried by the sharp drop off in building consents.
And the largest quarterly goods and services surplus on record at +AU$19.7 bln and a narrowing net income deficit to -AU$12.2 bln, contributed to Australia recording a +AU$7.5 bln current account surplus for the June quarter 2019, its first in 44 years. (The seasonally adjusted numbers are different.) In the full year to June, Australia ran a -AU$12 bln deficit, or one that is less than -1% of GDP.
Poor retail spending data out yesterday in Australia undermines the concept of using 'helicopter money' to boost an economy. They have just had a AU$16 bln election tax cut delivered as a cash refund - but consumers aren't spending it in the way intended.
The UST 10yr yield is down -3 bps at 1.47%. Their 2-10 curve is flat. Their negative 1-5 curve is wider at -40 bps. Their 3m-10yr curve is out to a negative -60 bps. The Aussie Govt 10yr is unchanged at 0.92%. The China Govt 10yr is also unchanged at 3.08%, while the NZ Govt 10 yr makes it three in a row, unchanged at 1.07%.
Gold is up at US$1,544, a rise of +US$25 since this time yesterday.
US oil prices are weaker again today at now just on US$54/bbl. The Brent benchmark is also lower at just on US$58.
The Kiwi dollar has risen on a weaker greenback and now up marginally to 63.3 USc. On the cross rates we are much lower at 93.6 AUc. Against the euro we are firmer at 57.7 euro cents. That leaves the TWI-5 little-changed at 68.8.
Bitcoin is now at US$10,628 in a rising trend and up another +5.4% from this time yesterday. The bitcoin rate is charted in the exchange rate set below.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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