Here's our summary of key economic events overnight that affect New Zealand, with news of a bounce no-one thinks will last.
In the US, strong new orders have powered the widely-watched ISM factory PMI to a better-than-expected expansion. But a strong counter-feature is that their employment category stayed in a seriously contracting state, suggesting those firms surveyed don't expect the rise to be sustained.
Something similar happened in the US version of the internationally-benchmarked Markit factory PMI, but the overall result for this one came in less positive and less than expected - and lower than the 'flash' result.
Essentially, we are seeing a post-lockdown recovery but the re-opening mistakes threaten further progress and factory managers seem to sense that.
The private sector China PMI outperformed the official one again, and came in with an even better expansion than their original 'flash' report for July. A notable category here is that new export orders are still contracting and haven't expanded in any 2020 month yet. Employment is also still mildly contracting.
A more immediate risk threatens China. After continuous rains in June has raised flood levels in mid and southern China, a new typhoon is due to hit the country tonight to make matters worse. All eyes will be on how their major river dams cope. Shanghai is on high alert.
In Australia, the same PMI series shows their July recovery in the factory sector gathered pace with output and new orders both returning to growth. But again, factories are not expanding their workforces.
And of course, Victoria is going into a deeper lockdown, although not quite as severe as the New Zealand one. It will have nationwide economic impacts and undoubtedly affect New Zealand exports to Australia.
HSBC, which is Europe’s largest bank, has drastically raised provisions for expected loan losses to US$6.9 bln as the pandemic weighed on economic activity in most places it operates. It is also being bruised by the impact of US-China trade friction and now China wants to punish it for obeying anti-money laundering laws in Canada that ensnared a Huawei princess. (She is about to be extradited to the US.) Their first half profits fell from almost US$10 bln in 2019 to just over US$3 bln in the equivalent six months to June 2020. It is speeding up its previously announced job cut program of 35,000 positions.
India is pushing forward with measures to prevent trade partners mainly in Southeast Asia from re-routing Chinese goods to India with little added value. This is part of an overall plan to limit imports and push for self-reliance.
In global equity markets, the S&P500 is up +0.9% in afternoon trade on Wall Street. The Nasdaq is up even more. Overnight, European markets rose a very strong +2.2%. They follow Tokyo which was also up +2.2%. But Shanghai only managed a +1.8% gain and Hong Kong actually fell -0.6%. The ASX200 was flat and the NZX50 fell -0.5%.
In Australia, there have now been 18,318 cases reported, another +395 overnight, and still very much concentrated in Victoria but also small and growing pockets in both Sydney's suburbs, and now Queensland. Their death count is up to 221 (+13). Their recovery rate is now under 58%. There are now 7479 active cases in Australia (+184) and almost all are community transfer.
The latest global compilation of COVID-19 data is here. The global tally is 18,148,000 and that is up +296,000 since this time yesterday. Global deaths reported now exceed 690,000 (+10,000).
A quarter of all reported cases globally are in the US, which is up +41,000 from this time yesterday to 4,832,000. US deaths are now just over 158,500 and a death rate of 479/mln (+1/mln). And the net number of people actively infected in the US rose +23,000 overnight to 2,284,000.
The UST 10yr yield has risen with the opening of Wall Street and is now just over 0.56% and moving off its record low. Their 2-10 curve is steeper at +45 bps. And their 1-5 curve is a little steeper too at +10 bps, while their 3m-10yr curve is much steeper at +47 bps. The Aussie Govt 10yr yield is up +4 bps at 0.87%. The China Govt 10yr is down -2 bps at 2.97%. And the NZ Govt 10 yr yield is unchanged at its new lower level of 0.75%.
The gold price is marginally lower today, down -US$2 to US$1,974/oz. This market seems suddenly hesitant on what the future is.
Oil prices are up, but by a bit less than +US$1/bbl today. They are now just over US$41/bbl in the US and the international price is now just under US$44.50/bbl.
But the Kiwi dollar is softer again against the US currency and now at 66.1 USc. Against the Australian dollar we are unchanged at 92.9 AUc. Against the euro we are unchanged at 56.3 euro cents. That means our TWI-5 is at 69.5.
The bitcoin price is firmer by +1.4% today at US$11,435. 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 ».