Here's our summary of key economic events over night that affect New Zealand, with news that both pandemic and climate risks are gnawing away at economic activity.
American retail sales rose in July, but by less than was expected. The +1.2% gain in July from June was timid compared to the +8.4% rise in June from May, and less than the expected +1.9% rise. And without a +24% jump month-on-month for purchases of electronic goods (almost all of which are imported) it would have been even weaker.
American consumer sentiment is remaining low and down almost -20% from August a year ago.
US industrial production is still shrinking fast, down -8.2% in July form the same month a year ago, but at least that is better than the June shrinkage of -11%. The real weakness in is the production of business equipment; that is down -14% yaer-on-year.
And that is quite the contrast with Canada. Their industrial production is rising, and fast (although admittedly this data is for June). Canada seems to be a winner with the new NAFTA trade pact.
In good news for Australian iron ore demand, China's crude steel production jumped more than +9% in July to over 90 mln tonnes. But China also reported surprisingly weak retail sales in July, and unusual decline. And their electricity production fell more than -4.6% in July from June and was up only +1.9% year-on-year. In China's terms, these are very weak results.
But a survey by the American Chanber of Commerce in China has found that almost 90% of American companies had no immediate plans to leave China, despite sour American-Sino trade relations. In fact, they are finding trading conditions quite good.
However, for many locals, rents in 20 major Chinese cities fell -2.3% in July from the same month year earlier, the fourth consecutive month of decline in a market that’s been buoyant for years. It is a trend that is corroding the fortunes of millions who bought apartments for rent. Now they face mortgage payments that aren't being covered by rents, and vacancies are rising.
McKinsey is warning that the diversion into pandemic risks is obscuring a focus on climate change risk that needs to be addressed now. And they see two thirds of these global risks in Asia. South Asia is particularly at risk because it has such a high number of poor people, who tend to rely more on outdoor work, living in areas most vulnerable to extreme increases in heat and humidity. By 2050, the loss of that labour could cost the region almost $US5 tln per year in GDP, about two-thirds of the global total at risk. But not every country in the region will suffer. They make the point that Australia and New Zealand's crop yields could rise by up to +45% by 2050.
Wall Street is ending the week on a flat note. The S&P500 is down just -0.1% so far today and that means for the week a modest +0.4% gain. But it also means it is very close to a record high and since the start of the year the S&P500 has added almost +US$1.1 tln. Overnight however, European markets all fell sharply, down by more than -1%. Yesterday, Shanghai ended up +1.2% on the day in a surging late session for an unchanged weekly result. Hong Kong ended unchanged that booked a +2.7% gain for the week. Tokyo was up +0.2% on Friday to book a +4.3% gain for the week. The ASX200 was up +0.6% on the day and a +2.0% weekly rise. Bank shares were responsible for most of this rise. The NZX50 Capital Index ended its day down -0.4% and a weekly loss of -1.7%.
The latest global compilation of COVID-19 data is here. The global tally is 21,011,000 and that is up +305,000 since this time yesterday and no slackening of the spread. Global deaths reported now exceed 761,000 (+10,000). The pace of deaths is rising.
A quarter of all reported cases globally are in the US, which is up +66,400 from this time yesterday to 5,449,800. US deaths are now just over 171,000 and a death rate of 516/mln (+4/mln). And the net number of people actively infected in the US rose overnight to 2,424,500, so sill many more new infections than recoveries.
In Australia, there have now been 22,743 COVID-19 cases reported, another 358 overnight, and still very much concentrated in Victoria. But there were cases recorded in four other states too. Australia's death count is up to 375 (+14). Their recovery rate is now over 58%. There are still 9023 active cases in Australia (+22) indicating fewer recoveries than new infections now.
The UST 10yr yield is softer by -1 bp at 0.71%. Their 2-10 curve is +6 bps holding at +56 bps. And their 1-5 curve is slightly flatter at +16 bps, while their 3m-10yr curve is much flatter at +58 bps. The Aussie Govt 10yr yield is unchanged at 0.93%. The China Govt 10yr has slipped marginally to 2.97%. But the NZ Govt 10 yr yield is +2 bps firmer at just under 0.67% and off its all-time low.
The price of gold is lower again today and down -US$15 to US$1,943/oz. That is a -4.3% fall for the week. Silver is down today too and a net -7.6% fall for the week.
Oil prices are softish today. They are now just under US$42/bbl in the US and the international price is now still under US$45/bbl.
And the Kiwi dollar fell overnight and is now at 65.4 USc. Against the Australian dollar we are also softer at 91.3 AUc. Against the euro we are down too at 55.3 euro cents. That means our TWI-5 has dropped to 68.6 which is where it was when we were about to go into Level 1 last time at the beginning of June.
The bitcoin price is only marginally softer from this time yesterday at US$11,482. 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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