Here's our summary of key economic events overnight that affect New Zealand, with news financial markets are lower today on fears for US growth underperformance, and Chinese growth from SARS II.
But first up today, we had another dairy auction and prices rose for a second time in a row, up +1.7% in US dollar terms and +1.9% in New Zealand dollar terms. Among the key commodities offered, SMP was barely changed, up just +0.7%, but WMP gained a bit more, up +2.4% today. Volumes offered were unremarkable. This is an auction event widely watched, but is dominated by product from Fonterra. Although there are six sellers on the platform, Fonterra accounts for more than 95% of the product offered. Today's event won't be changing any farm payout forecast. And also note that we are well past the peak of the current season and volumes are now running at only 75% of their peak, and will fall steadily to 50% by the end of April, then die away quickly from there. This season will be locked and loaded soon.
Following large falls in Asia yesterday, European equity markets were also lower overnight and Wall Street is back from its long weekend, lower as well. Yesterday's gloomy IMF growth forecasts, especially for the US, and worries about what the coronavirus outbreak in China, are weighing on sentiment. Markets remember the impact SARS had in China last time.
The Wuhan virus outbreak is spreading with hundreds now infected. It has also been reported in South Korea, Thailand and now the Philippines. China's Spring Festival holiday travel could easily be a catalyst for rapid spread. These risks saw the Shanghai equity market fall -1.4% yesterday and Hong Kong fell -2.8%.
In Taiwan, they reported GDP growth of an impressive +3.4% in Q4 2019, taking the overall 2019 rise to +2.7% and far better than most of its Asian rivals.
In Europe, the ZEW sentiment survey has brought a surprisingly large positive rise, far above what analysts were expecting. This builds on a quite remarkable turnaround since September and is now its most positive in almost ten years. The phase one trade deal between the US and China is getting the credit. Sentiment may be improving sharply, but EU economic growth prospects are not expected to follow in such a dramatic way.
France's plan to make mainly American tech giants pay a 3% revenue tax on their business operations in the country has been put back to the end of the year while the matter is under negotiation with the US. That may mean that France will not go it alone and come back in under the OECD BEPS proposals. The US has also agreed to hold back on any retaliation on French products.
In Australia, BHP is saying that bush-fire smoke Is slowing production at its thermal coal mines. (See page 8.) The poor air quality is making equipment harder to operate, and some workers have had to take leave to fight fires. The irony was not lost on many in Australia.
The UST 10yr yield is much lower today after the US long weekend at just under 1.78% and down -5 bps. American growth fears are behind the pullback. Their 2-10 curve is still tighter +24 bps. Their 1-5 curve is even less at +4 bps. And their 3m-10yr curve is down to +24 bps. The Aussie Govt 10yr is at 1.13% and down -4 bps overnight. The China Govt 10yr is also lower, down -3 bps at 3.10%. But the NZ Govt 10 yr is rising, up +2 bps at 1.56%.
Gold is now at US$1,557/oz and up +US$4 from this time yesterday.
US oil prices are unchanged at US$58.50/bbl while the Brent benchmark is lower at US$64.70/bbl.
The Kiwi dollar is little-changed at just on 66.1 USc. On the cross rates we are firmer at 96.4 AUc. Against the euro we are unchanged at 59.6 euro cents. That puts our TWI-5 just under 71.4.
Bitcoin is again little-changed from this time yesterday at US$8,623. 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 ».