Here's our summary of key economic events over the weekend that affect New Zealand, with news many more Chinese companies are reporting bond, liquidity and leverage stress.
But first, Wall Street is up at another new record high with a +1.0% gain so far today by the S&P500. Good trial results by another drug company with a vaccine drove this rise. It is not the near-term benefits the markets are cheering, it is that the two new vaccines represent a new more powerful way to fight pandemics. The rollout of both will be slow however. Overnight, European markets rose a similar amount. Yesterday, Shanghai closed up +1.1%, Hong Kong was up +0.9% and Tokyo ended up +2.1%. But the ASX exchange stayed frozen all day, but booked a +1.2% rise in early trade. The NZX50 Capital Index was up +0.4% at its [normal] close.
With the oil price, the NZD has risen from this global risk rally.
In the US, there has been a marked slowing in factory activity in the New York region in early November, the next regional Fed survey to report.
In China, although officials are claiming house prices have moved little between September and October, in fact the year-on-year rise in key cities like Beijing and Shanghai are up +4.2% and +4.4% respectively, and prices in Shenzhen are up +5.2% and embedding the lure of "investing in housing". Nationally the rise was +4.3% and marginally lower than September's +4.6% gain.
The woes of the Chinese bond market are spreading, with now both a regional bank, and a major aluminium producer caught in their own liquidity traps. The negative power of leverage is coming home to roost.
China's October retail sales were up +4.3% year-on-year, higher than the +3.3% September rise but still well below the expected +4.9%. They will be disappointed, especially as the Golden Week holiday was supposed to bring a surge in spending. They will be wondering whether the Singles Day/Double-11 retail event and its lead-up is just cannibalising's their consumer demand improvements.
China's electricity production was up +4.6% in October, the second month in a row growth has slipped, and more importantly, the second consecutive month production of electricity itself has retreated.
But one area China is performing well is its industrial production, up +6.9% in October from the same month a year ago, and back to its pre-pandemic growth levels. Drugs, metals and transport equipment manufacturing were all sectors that performed very well. Laggards were electronics, and mining.
Another area they will be pleased with is foreign direct investment. This rose a very healthy +6.4% in October, and well above recent trends.
The latest global compilation of COVID-19 data is here. The global tally is 54,563,000 and a +436,000 rise from yesterday. It is still grim in France, Russia, the UK, Spain and central and southern Italy with very serious stress on their hospital systems. It is even worse in Belgium. And Sweden has now toughened its pandemic response. Global deaths reported now exceed 1,320,000 and up +5,000 from yesterday.
The largest number of reported cases globally are still in the US, which rose +154,000 since this time yesterday to 11,391,000. The US remains the global epicenter of the virus. The number of active cases is surging at 4,194,000 and that level is up +100,000 in one day, so many more new cases more than recoveries. Their death total now exceeds 252,000 and continuing to rise by more than +1000 a day. The US now has a COVID death rate matching Bolivia, Mexico, Italy and the UK of 760/mln.
In Australia, they are not getting any significant resurgence. There have now been 27,750 COVID-19 cases reported, and that is +25 more cases and mainly from the new South Australia cluster. Only 86 of their cases are 'active' now (+17). Reported deaths remain unchanged at 907.
The UST 10yr yield will start today little-changed at 0.90%. Their 2-10 rate curve is little-changed at +73 bps, their 1-5 curve is marginally steeper at +30 bps, with their 3m-10 year curve also little-changed +81 bps. The Australian Govt 10 year yield is up +2 bps at 0.93%. The China Govt 10 year yield is also firmer by +1 bps at 3.30%. And the New Zealand Govt 10 year yield is also up +1 bps at 0.84%.
The price of gold has risen +US$7 this morning and now at US$1896/oz.
Oil prices are higher today and by about +$1.50/bbl so it is at US$41.50/bbl in the US, while the international price is now just over US$44/bbl.
And the Kiwi dollar is +½c firmer today to 69 USc. Against the Australian dollar we are unchanged at 94.2 AUc. Against the euro we are firmer at 58.3 euro cents. That means our TWI-5 is now up at 71.8.
The bitcoin price is +3.5% higher this morning from this time yesterday, now at US$16,578. 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 ».