Here's our summary of key economic events overnight that affect New Zealand, with news China is 'buying' its resurgent growth which is coming with some large-problem downsides.
But first, the US is on a public holiday today - Martin Luther King Jr Day - and the NYSE is closed. Overnight, European markets were mixed with Frankfurt up +0.4%, Paris up +0.2% but London down -0.2%. Yesterday, Shanghai rose +0.8%, Hong Kong rose a full +1.0%, but Tokyo went the other way and was down -1.0%. The ASX200 ended its session down -0.8% and the NZX50 Capital Index fell -1.4%.
In China, their Q4 economic growth beat expectations when it was released yesterday afternoon. That growth actually came in at +6.5%, and significantly above the expected +6.1%. For an economy as large as China, that difference is quite something. (For the year, it is +2.3% higher than for 2019.) Driving this Q4 rise is a strong rise in industrial production (+7.3% vs the expected +6.9%). Electricity production was up a very impressive +9.1% in December from a year ago, driven by the current cold snap there. But retail sales under-performed, rising only +4.6% when a +5.5% rise was expected. Clearly their two-track "dual circulation" isn't working in a balanced way yet, despite the glorious claims.
In fact, the reliance on huge government subsidies and stimulus is making inequality worse in the Middle Kingdom. And productivity (output per worker) remains very poor. It is only 30% of the level in first world countries like the US, Japan and Germany. China's SOEs and 'investment' in public sector projects gets the blame. China's real risk is "getting old before it gets rich". It must fix its huge productivity problem to avoid that outcome. And sorting out its worsening inequality is where it must start.
Singapore's exports staged a significant and substantial rally in December, rising +6.8% after two months of worrying declines. This was mainly based on growth of specialised machinery rather than electronics and was despite exports to China, the EU, Indonesia and Japan all declining. The US, South Korea, Hong Kong and Thailand were where the big growth for them was.
In Australia, officials there are now indicating that "overseas travel" is unlikely to return in 2021.
The latest global compilation of COVID-19 data is here. The global tally is rising faster, now at 95,179,000 and up +477,000 in one day. We are heading for 100 mln in about a week now mainly because the UK variant is taking off worldwide now. It is still very grim everywhere except in our region. Global deaths reported now exceed 2,034,000 and +9,000 since this time yesterday as death rates rise everywhere.
But the largest number of reported cases globally are still in the US, which rose +161,000 for their tally to reach 24,489,000. The US remains the global epicenter of the virus. The number of active cases rose overnight and is now at 9,652,000 and that level is up +75,000 in just one day, so many more new cases than recoveries and again by a substantial margin. Their death total is up to 407,000 however (+1000). The US now has a COVID death rate of 1226/mln, awful but made to look 'good' by the the disastrous UK level (1320) where deaths are surging.
In Australia, their community resurgence is back under control although officials are on high alert over the risks from the UK variant which is starting to show up in managed isolation intercepts. That takes their all-time cases reported to 28,721, and only +13 more cases yesterday with all in managed isolation, mostly related to the Melbourne tennis tournament. 203 of these cases are 'active' (-12). Reported deaths are unchanged at 909.
The UST 10yr yield will start today unchanged at 1.09%. Their 2-10 rate curve is unchanged at +95 bps, their 1-5 curve is still at +35 bps, and their 3m-10 year curve is also unchanged at +101 bps. The Australian Govt 10 year yield is unchanged at 1.03%. The China Govt 10 year yield is firmer by +3 bps at 3.19%, while the New Zealand Govt 10 year yield is marginally lower and now at 1.02%.
The price of gold is up +US$8 today in New York in truncated trading and now at US$1838/oz. In India, there is a surge in weddings, many delayed from last year due to the pandemic. And that is contributing to a healthy rise in demand for gold in the country.
Oil prices are just over US$52/bbl in the US while the international price is now just under US$55/bbl and both are very little changed.
And the Kiwi dollar is slightly weaker again today from this time yesterday at just under 71.2 USc. Against the Australian dollar we are softer as well at 92.5 AUc. Against the euro we are down to 58.9 euro cents. That means our TWI-5 is now down at 72.7 and its lowest of the year so far.
The bitcoin price is virtually unchanged this morning compared to this time yesterday. It is now at US$35,710. Volatility has been +/- 3.8% in between however. 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 ».