Here's our summary of key economic events overnight that affect New Zealand, with news the NZ dollar is falling hard in the shadow of panic by professional investors on major stock markets.
Wall Street is falling sharply again this morning, with the S&P500 down -9% and falling in mid-afternoon trade. Trading was stopped for 15 minutes as an attempted circuit-breaker. But that didn't work. This yo-yoing (the S&P500 was up +6% the day before) won't continue. The trend is clear; the S&P500 is now a net -23% so far in February and -30% since the start of the year. The 'up' days are for mugs when the 'smart money' sells.
The enormous fiscal stimulus package proposed still isn't in place in the US with public policy action as confused on the economic front as it is on the infection-control front.
Bankruptcies of icon companies like Boeing now seem much more likely. The ripple effect will be huge.
American building permits and housing starts slumped in February from January and much more than the expected softness. But they were both still well above the year-ago levels.
Overnight, European stock markets fell about -6%. Yesterday it was less in Asia although closer to home the ASX200 fell -6.5%. The NZX50 Capital Index actually managed a tiny gain on the day, although earlier big rises dissolved as the day closed.
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In China, electricity consumption dropped by -8% in the first two months of 2020. Changes in China’s energy consumption are closely watched as a gauge of the country’s economic conditions. Economic activity could contract -10% in Q1-2020, but that now no longer seems out of place with what is going on in major first-world countries.
But it is clear that, slow as it is, many Chinese cities are opening again and some sense of normality is starting to return.
However, a Chinese port has closed entry to ships from nine countries including Japan, Singapore, the US and Europe in fear of virus re-infection. New Zealand isn't on the list but of course ships that service our Chinese trade almost all include port calls from those countries in their routes.
The latest compilation of Covid-19 data is here. The global tally is now 212,00 of officially confirmed cases and rising by the hour now, up +65% in a week. There are now 171,000 cases outside China and European cases now exceed the Chinese cases. It of course much worse than that because 86% of the Chinese cases have recovered whereas the European number is well below 10%. Also rising very fast is the USA (7324) exploding +40% IN ONE DAY! (and up from 5204 this time yesterday.) It looks like the Americans have the worst control measures in place of anywhere. The global official death toll now is almost 9000. New Zealand has eight new cases of Covid-19, all overseas travel related. There are four new cases in Auckland, one in Christchurch, two in Waikato and one in Invercargill. This brings our total to 20 confirmed cases in NZ and all directly overseas travel related.
In Australia, fear is spreading with stockpiling rampant as confirmed cases rise +25% a day from a relatively small base. They are now up to 568 cases and it is in community spread mode.
The UST 10yr yield is again much higher today, up almost +34 bps from yesterday and now at 1.20%. With sharply higher long-term risks, investors want to be paid better, even for benchmark bonds. Rate curves are still sharply positive as short pricing collapses. Their 2-10 curve is a lot more positive at +70 bps. Their 1-5 curve has also turned much more positive at +51 bps. while their 3m-10yr curve has ballooned out even further at +107 bps. The Aussie Govt 10yr yield is up +32 bps now at 1.38%. The China Govt 10yr is up +3 bps at 2.78%. The NZ Govt 10 yr yield is also very sharply higher, now at 1.47% and up another +22 bps in a day.
Gold is still yo-yoing and has tumbled to US$1,486 today, a -US$44 drop.
US oil prices have plunged to new depths today, down -US$7.50/bbl to just under US$20.50/bbl with the Brent benchmark just under US$25. That is a 20 year low in current dollar terms; inflation adjusted it is a 22 year low. Vanishing demand as major economies shutdown can't seem to be stopped.
The Kiwi dollar starting today sharply lower, down more than -2c to just 57.6 USc and a new eleven year low. On the cross rates however we are little-changed, now at 99.4 AUc. Against the euro we are also sharply lower at 53.2 euro cents and more than a -1c drop and that is a ten year low. That means our TWI-5 is now at 65.1 and also a ten year low.
Bitcoin is slightly softer today at US$5,231, a drop of -2.6% since 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 ».